The PLSA has today set out the five key things it would like to see in the Chancellor’s upcoming Budget to support UK pension schemes and savers. The five measures are:
- Pensions tax relief – There are three areas where the PLSA believes changes can be made to simplify the pensions tax relief system: ensuring low earners get full tax relief in net pay schemes by amending HMRC systems; removal of the high earners taper to the annual allowance; and a review of the Money Purchase Annual Allowance.
- Continued support for the success of automatic-enrolment – To improve adequacy levels, we propose increasing automatic enrolment contributions to 12% of salary by 2030, split 50-50 between employer and employee. We also urge the Government to remove the Lower Earnings Limit and lower the minimum age for automatic enrolment from 22 to 18.
- Long-term care – A sustainable funding solution that will endure for a generation must meet four tests: maintain retirement income adequacy, universality, fairness and affordability.
- Ensuring the future of Defined Benefit Schemes through enabling superfunds – Despite over £120 billion of special contributions and close to £400 billion in overall contributions, the majority of DB pension schemes remain in deficit, meaning three million scheme members were at risk of not receiving their full benefits. We encourage the Government to bring forward legislation that will enable the creation of pension superfunds to address the problem.
- Proposed changes to the Retail Price Index (RPI) – Increases in millions of savers’ pensions are promised against RPI increases, which are hard-wired into both legislation and scheme rules and cannot be changed easily (as many High Court cases have proven). For individual savers, changes could lead to a reduction of up to 15% of their retirement income. We urge HM Treasury to engage with the industry and give consideration to a timeframe and approach that mitigates the impact on pension savers.
Nigel Peaple, Director of Policy & Research, PLSA said:
“While automatic enrolment has been a huge success in getting most employed people saving for retirement, more must be done to ensure they are saving enough to have an adequate retirement income. We have proposed a number of small, targeted changes that will make the pension system work better. We believe these measures will help ensure the UK Government goes on supporting UK pensions, millions of savers and the wider UK economy.”
Click here to read the PLSA’s Budget submission in full.
Mark Smith, Senior PR Manager
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Steven Kennedy, PR Manager
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