A new survey from Penfold, the digital workplace pension provider, ahead of the upcoming UK Autumn budget, has highlighted a growing national uncertainty in pension planning and protection.
73% of survey respondents expressed a lack of confidence (ranging from not very to not at all) that the government will protect pension savers in the upcoming Budget. Nearly half of the respondents went on to state fears that they won’t retire comfortably, with a further 30% unsure.
Speculations suggest potential reforms to pension tax relief, salary sacrifice schemes and tax-free cash and lifetime allowances may be heading to the UK pension sector to minimise the £22 billion funding gap. Analysts suggest the government may introduce a flat rate of around 30% to simplify the system and reduce costs, potentially generating £15 billion in additional revenue. But as futures are threatened, UK savers are suffering increased mistrust in their pension safety and future planning.
“Comfortable, dependable retirement feels out of reach for many UK savers at the moment,” says Chris Eastwood, CEO and Co-Founder of Penfold. “The growing trust gap between savers and the government has highlighted an urgent need for accessible and reliable pension planning options, especially given the current lack of faith in government protection for pensions and current tax efficiencies.”
Further comments on the snap poll revealed to Penfold that many feel frustrated over shifting retirement ages and tax changes, which makes long-term life planning ever the more difficult. Additionally, many expressed a deeper emotional engagement due to housing insecurity, government distrust, and even feeling left behind due to a lack of reliable advice.
“Moving the goalposts and changing retirement rulesets builds anxiety, frustration and distrust in government bodies,” continued Eastwood. “Our findings paint a stark picture of pension confidence in the UK. With many expressing fears in policy instability and nearly half believing they won’t retire comfortably, it’s essential pension providers can offer proactive, personalised planning tools that can give the reassurance UK savers are searching for.
“Ultimately, the UK is in a savings crisis when it comes to pensions, with many unable to save enough by default. Auto-enrolment minimums are too low, and salary sacrifice can be incredibly powerful and effective in encouraging individuals to save more in excess of those minimums. The predicted salary sacrifice cap therefore undercuts this considerably, creating another barrier to retirement saving for millions of workers across the country.”
Eastwood concludes, “Savers want stability and confidence in their investments, which is sorely lacking ahead of these predicted outcomes. Pension policy should not be seen as a short-term fiscal measure. If the government proceeds with these changes, it only creates further disappointment for UK savers.”
