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:
- Continued support for the success of automatic enrolment: Automatic enrolment has been the most successful pensions reform in a generation, however contribution levels are still too low. Despite the uncertain economic outlook, in the PLSA’s view it is essential the Government presses ahead with its plans for an increase in 2019. However, even with contributions at 8% of band earnings, PLSA has calculated only 3% of people will be able to achieve the target level set by the Pensions Commission. Therefore, the PLSA wants contributions to rise to 12% of salary by 2030.
- Adaptations to pensions tax relief: With automatic enrolment 25% more expensive for savers under net pay arrangements, the PLSA is urging the Government to resolve the discrepancies between net pay arrangements and tax relief at source. It is also calling for the Government to set a clear objective for tax relief as the first step in making the system work better for savers. The PLSA believes this objective should be to help as many people as possible achieve an adequate retirement income.
- Ensure the future of Defined Benefit (DB) schemes through enabling superfunds: With PLSA research showing three million DB scheme members are unlikely to receive their full benefits, and a buy-out by an insurer is unachievable for all but the strongest schemes, it’s vital other options are explored. The PLSA urges the Government to take forward the proposals from its White Paper to strengthen protection for savers through allowing consolidation and the creation of superfunds.
- A successful Brexit for the UK pensions sector: Pension schemes need a Brexit that does not harm economic growth by ensuring good access to the EU single market. It must also deliver the right regulatory regime, in particular it must ensure that schemes that only operate in the UK are not affected by EU rules on scheme funding.
- Allowing illiquid investments: The uncertain economic and financial climate, combined with a low interest rate environment, has meant that pension schemes have struggled to get the investment returns they need in recent years. It’s therefore essential that Government continues its work on improving schemes’ access to more illiquid investment opportunities, such as infrastructure.
Nigel Peaple, Director of Policy & Research, PLSA said: “Pensions are a vital part of the UK economy. Not only do they provide essential support for millions of workers saving for retirement, but the money pension funds hold is invested back into driving economic growth. With PLSA members managing £1 trillion in assets, it’s crucial pension schemes’ interests are considered in this year’s Budget.
“We have written to the Chancellor to set out the measures we believe will help ensure the Government continues to support UK pensions, the millions of savers invested in them, and the wider UK economy.”
Robyn Margetts, Head of Communications
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Steven Kennedy, PR Manager
020 7601 1737 | 07713 073024 | [email protected]