SaRA best addresses retirement savings needs
PIMA wishes to congratulate the savings industry bodies who have made detailed responses to the Second Pensions Commission Report.
The traditional life, pensions and long-term savings industry has made considerable progress on the issue of cost. However PIMA continues to believe that there is much more work to be done in order to ensure that more people are saving for their future needs in retirement.
Tony Vine-Lott, director- general of PIMA, said:
“By allowing the creation of a long-term savings wrapper, such as the Savings and Retirement Account (SaRA), the Government and the industry would go a long way to address the fundamental concerns of people regarding their long-term savings.”
Cost, while an important factor to both fund accumulation and the decision to start saving, is only one factor. PIMA believes there are five key principles which should be applied towards successful pensions policy reform by both Government and the savings industry:
• Transparency is essential. Saving decisions are best made when savers understand exactly what the value of their savings is and what investments they hold. In a SaRA wrapper, investments could be valued at any time.
•Flexibility is vital to reinvigorating the culture of long-term savings. While some progress has been made in recent days suggesting schemes with more flexibility, the solutions offered still do not accurately reflect the way people work and live. Many of those who are under-saving are not in regular work or may take career breaks. This means they need flexible savings schemes that fit modern lifestyles. SaRA would allow contributions to be made through one employer, multiple employers, from private savings, and from other sources of funds. Contributions may stop or start.
•Portability is key. Unlike pension pots of the past that are linked to employers, the pensions savings of the future must reflect the realities of modern life—they must be personal and portable.
•Choice is important if people seek to maximise savings through lower management charges, they may choose a scheme like the NPSS. However, if they seek higher returns through what they deem to be higher quality instruments, then a higher cost may neither be a deterrent nor inhibit greater growth in their savings.
•Simplicity in saving by combining all of the above will mean higher savings levels and better preparation for the future for a greater number of people. That’s why PIMA is pushing for a better solution for everyone; the flexible Savings and Retirement Account.
For more information:
Tony Vine-Lott, Director-General, PIMA
07790 006108
Iain Anderson or Jacob Coy, Cicero Consulting
020 7665 9535
07886 197086