Pension taxation changes alone will not solve UK’s £9 trillion retirement savings gap, says KPMG
Commenting in response to the Government consultation into the UKs pensions taxation system and what incentives should be offered to savers, which closes today, Stewart Hastie, pensions partner at KPMG, said:
“The debate on whether to go “Exempt-Exempt-Taxed” (EET) or “Taxed-Exempt-Exempt” (TEE) is missing the point.
“Both can be designed to solve the complexity and inequalities of the current system. Designed correctly, both can improve outcomes for savers to help address our £9 trillion long-term savings gap. However any transition, particularly to TEE, must have sufficient lead time. Ideally five years, but no less than three.”
“The real question now is whether Government commits sufficient funds to incentivise long-term savings, or use this as an opportunity to accelerate and increase tax revenue and defer the problem to future generations.
“We would like to see the Government introduce the ability to consolidate pension schemes to make it simple and cost effective for individuals.
“Employers deserve more incentives, given their increasingly important role encouraging long-term savings and in helping bridge the consumer advice gap.
“Finally, there must be new approaches for getting those outside of regular employment to benefit from incentivised retirement saving including carers, temporary and itinerant workers, sole traders and the self-employed.”
Earlier this week, KPMG published a study in partnership with the Association of British Insurers into the UK’s long-term savings gap. The report called for the Government to provide a sustainable strategy to encourage long-term savings, in response to the pensions flexibility reforms.
