The Pensions and Lifetime Savings Association (PLSA) has said it wants to explore how reforms to pensions tax relief can help improve retirement income.
In a new consultation paper, the pensions industry body called for new national income targets and changes to the saving system to help people meet those targets.
Citing research which found 78% of people aged 18 to 64 do not know if they are on course with their pension saving, the body said people need targets to aim for with their retirement. It called for the potential introduction of national retirement income targets, which are in place in Australia, to give savers goals to reach the retirement they want.
In order to meet these targets the PLSA said it wants to explore a number of reforms to improve saving, including changes to pensions tax relief.
‘We are interested in exploring whether tax relief could be modified to help people achieve our proposed retirement income targets,’ the consultation said.
The PLSA said the current pensions tax relief system enables savers to meet its ‘comfortable’ income goals but is not providing enough support for people with small pots reach ‘minimum’ levels of saving.
Graham Vidler (pictured), director of external affairs at the PLSA, said he was keen to hear the views of IFAs during the consultation.
‘Savers will need support as they work to achieve the retirement income targets and we need to consider what might need to change within the UK retirement and savings market to facilitate these steps forward. Advisers spend a considerable amount of time helping their clients navigate the retirement market so we are particularly keen to hear their views,’ he said.
Last year the government spent over £50 billion on pension tax relief, which has prompted fears there could be further changes from the Treasury.
A Times report at the weekend cited one source close to the Treasury as saying: ‘The cost of tax relief is only headed in one direction at the moment. There is widespread recognition that the cost trend needs to be reversed.’
However in July the work and pensions secretary David Gauke said he did not believe there would be ‘fundamental changes’ to pension tax relief in the immediate future.
By J Gilbert (Citywire)