We are the voice of insurance and long-term savings | Contact us

ABI calls for tax reform to help close the UKs pensions saving gap

The UK pensions tax system needs to be reformed to help many workers on lower and middle incomes secure their retirement, the ABI said today (22 October).

The call came at the launch of the Pensions Policy Institute report: ‘What level of pension contribution is needed to obtain an adequate retirement income?’.

This highlights that the minimum annual contribution rate of 8% under auto enrolment alone will not be enough to secure an adequate retirement income for many workers.

Speaking at the launch of the report, Stephen Gay, the ABI’s Head of Savings, said:

"Ensuring adequate pension incomes is one of the biggest challenges facing society. Many lower and  middle earners face an uncertain retirement as squeezed family budgets and low interest rates make it tough to save, yet increasing life expectancy makes the need to save for retirement more important than ever.

"Auto enrolment has made a promising start in reducing the pensions gap but, as this report shows, more reforms are needed. The pensions industry is continuing to reform to ensure value for money pensions, and we need to continue with ‘the next big idea’ to encourage greater saving.”

Gay said the key to helping the people who need to save the most - those on lower and middle incomes - is a pensions tax system that:

  • Is simpler and fairer for people to understand and that benefits the maximum number of working people
  • Encourages those on low and middle incomes to save as much as they can afford
  • Is straightforward to implement for employers and the industry
  • Commands cross-party political support
  • Demonstrates good value for money to the Chancellor of the Exchequer, costing no more or less than the current system

He added:

"There are no quick fixes, but a pensions tax system that encourages more people to save is needed to build on the initial success of auto enrolment.”

Last updated 01/07/2016