LEBC Group is calling on all political parties to commit to make saving for retirement easier.
The National IFA said that the last three Governments – Conservative, Coalition and Labour – have endlessly tinkered with the allowances for tax relieved pension savings.
What’s more, said LEBC, the number of individuals required to pay back tax relief, due to the lifetime and annual allowance restrictions is small, as is the total revenue they generate. Yet the complication of these obscure stealth taxes adds to the cost of retirement planning and acts as a barrier to saving.
In the future, LEBC would like to see:
- abolition of the lifetime allowance for pension savings;
- fairer and simpler universal annual allowance for pension savings, with basic, higher and top rate taxpayers all getting the same allowance.
LEBC’s Director of Public Policy s Kay Ingram said: “Future income needs can be met by saving some of today’s productivity for consumption later. However, failure to address this shortfall could result in a future of higher taxes levied on younger workers, struggling to support an ever growing elderly population, who in turn will face lower living standards.
“The savings ratio, a measure of the share of the wealth we are saving has, according to Government figures, hit an all-time low of 3.3%*. The longer term average is 5% and many experts believe it should be at least 8% and ideally higher, if future generations are to be able to retire comfortably.
“Those most at risk of not achieving this aim are those currently in their mid-30s to mid-50s. This group is less likely to benefit from final salary pensions, compared to older workers and will benefit less than younger workers from recently introduced auto enrolment pension schemes.
“The General Election gives us a chance to engage with our elected representatives and to make them aware of what matters to us. This Election and the Parliament it produces is likely to be dominated by the Brexit negotiations, but there are still many other issues which we would like our MPs to focus upon. Encouraging more saving is one we think is important.”