Financial services firms propose range of innovative pension policies to kick-start savings culture
• TISA reveals pension policy recommendations as part of HM Treasury pension consultation process
• Policy recommendations aimed at rebuilding the habit of savings to provide for financial security, especially in retirement, before the UK reaches a tipping point in 2035
• Wisdom Council research shows that only 18% of adults know how to save enough for retirement
TISA, the financial services membership association, has today announced the first in a series of proposed pension policies which have been developed by The Savings and Investments Policy project1, (‘TSIP’, ‘the Group’). In response to HM Treasury’s three-month pension consultation process, it will publish a series of policies over the coming weeks aimed at rebuilding consumer confidence and trust in short, medium and long-term savings. The proposed policy areas covered include:
• Defined Contribution pension tax reform
• Pensions for self-employed individuals
• Getting the nation to 8% pension contributions and then beyond that to 12%
• Forecast incomes at retirement
• Comparisons between EET and TEE schemes
This unprecedented grouping of leaders from across the UK financial services industry conducted a comprehensive review of the UK pensions industry. Each policy has been carefully considered to determine the best ‘push’ and ‘pull’ factors to encourage people to save more for the future:
• Incentives should stimulate additions to the overall stock of UK pension savings
• A revamped form of pensions tax relief should be more progressive than the current system
• An incentive framework should recognise that for much of the working population, long- term saving for retirement happens in the workplace
• Self-employed people need to be included if we are to develop a solution for all the key groups who should be saving for their pension
• Solutions should seek to benefit from behavioural science and look to adopt nudge techniques that drive collective behaviour
• In a period of deficit reduction policies must minimise costs to the Treasury
• Changes should seek to minimise the disruption to savers and suppliers of services to the pension market
TISA’s Savings and Investments Policy project has also worked with the Wisdom Council2 to test the proposed policies with savers and investors. Highlights include:
• 41% believe they know the size of the pension pot they will need
– 18% believe they have planned sufficiently to achieve this
– 53% do not know how much should be contributed each month to reach their goal
• 38% want young people to have access for a house deposit but 66% want access limited until 55+
• Matched contributions are key – the more employers and the Government contribute, the more motivated employees are to contribute to their pensions
• All advice needs to be simple and tangible
Adrian Boulding, Policy Strategy Director of TISA said:
“This consultation is an important opportunity to improve the existing pension system and to achieve a sustainable savings and investments settlement for the next generation. We believe that our Savings and Investments Project group has developed a series of innovative and enduring policies, focused on how best to increase levels of personal savings across all segments of society to rebalance the pensions system.
“An area which presents the opportunity for bold reform is pensions for the self-employed. We must end the rough deal the self-employed face over saving for their retirement.
“The first year of this Parliament presents an opportunity to be bold, engage in debate and ensure the pensions system works for both present and future generations. Our proposals address how to tackle the on-going savings crisis and raise retirement savings levels for all people, which will in turn increase the amount of money available to invest in UK Plc, thereby supporting wider economic growth.”
TSIP is an unprecedented group of over 50 leading financial services companies, trade bodies and consumer groups which published a report (‘Saving Our Financial Future’) in March 2015 outlining six policy recommendations to rebuild a culture of savings in the UK and restore financial security for households.
Ends….
For further information please contact:
Alistair Kellie – Telephone: 020 7680 6558/Email Alistair.Kellie@newgatecomms.com
Sara Lyons – Telephone: 020 7680 6550 / Email Sara.Lyons@newgatecomms.com
Nick Morris – Telephone: 020 7680 6557/Email Nick.Morris@newgatecomms.com
Email: TISA@newgatecomms.com
Notes for Editors
TISA is a not-for-profit membership association operating within the financial services industry. We represent the interests of over 147 member firms involved in the supply and distribution of savings and investment products and services.
TISA has a highly successful track record in working cooperatively with government, regulators, HMT, DWP and HMRC to improve the performance of the industry and the outcomes for consumers. Policy and regulation continues to be the major focus for our members with regard to corporate responsibility.
TISA and its members’ remit is evolving into a clearer focus on pro-active consultation in the regulatory world in order to influence policy and associated regulation before its creation, rather than reacting to issued policy directives. This will help to ensure a more considered policy creation from the authorities.
1. The Savings and Investments Policy project is working with a wide range of financial service companies, trade bodies and consumer groups to develop these pan-industry proposals. It is directed by an Executive Committee formed of 16 leading financial services companies including Aviva, AXA Wealth, BNY Mellon, BlackRock, Ernst Young, Henderson, J.P. Morgan Asset Management, L&G, Lloyds Banking, Nationwide, Northern Trust, Old Mutual, Pinsent Masons, RBS, Threadneedle Investments and TISA.
2. The Wisdom Council conducted qualitative and quantitative research with a demographically representative sample of 290 people aged 18-75 who are classed as “pre-retired.”