The government needs to boost pension schemes’ access to illiquid investments, remedy the net-pay tax relief anomaly, and focus on securing a “successful Brexit” for pensions in its upcoming Budget, says the Pensions and Lifetime Savings Association (PLSA).
There also needs to be a commitment to increase minimum contributions under auto-enrolment (AE) and provide the “right regulatory regime” for defined benefit (DB) consolidators, the trade body told chancellor Philip Hammond (pictured).
In a written submission to the chancellor ahead of the fiscal statement on 29 October, the PLSA outlined the five policy areas, stating these would support “UK pensions, the millions of savers invested in them, and the wider economy”.
While not all areas are strictly within the Treasury’s remit, the trade body has urged Hammond to promote and facilitate the policies where possible.
The PLSA called for “continued support for the success of AE”, namely seeking total minimum contributions to rise to 12% of salary by 2030, in-line with the proposed timeline in its national income targets campaign.
It also urged the government to set a “clear objective” to “resolve the discrepancies between net-pay arrangements and tax relief at source”, which in turn would “help as many people as possible achieve an adequate retirement income”.
Earlier this week, the government indicated it would review the anomaly arising in net-pay pension schemes – where low-paid earners miss out on tax relief – and was “looking at opportunities”.
On access to illiquid assets, “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 is therefore “essential” government continues work to allow access to illiquid investment opportunities, including infrastructure.
Director of policy and research Nigel Peaple said pensions were “vital” to 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,” he said. “With PLSA members managing £1trn in assets, it’s crucial pension schemes’ interests are considered in this year’s Budget.”