03 May 2017

Pensions and Lifetime Savings Association unveils pension priorities for party manifestos

A strong pensions sector is key to a strong economy and the Pensions and Lifetime Savings Association (PLSA) has outlined its six priorities for pensions in the upcoming general election.

These are:

• State Pension – The State Pension, set at its current value relative to average earnings, is affordable without further increases to the State Pension age. The triple lock has been valuable in raising the relative incomes of pensioners but, if it is maintained in future, it will add around 1% of GDP to the cost of the State Pension. A simpler, fairer and more affordable uprating mechanism should be introduced, linking to earnings growth, enabling the State Pension to keep pace with working age incomes, with a floor to protect against any periods when wages fall. Indexing in line with earnings will allow the State Pension to maintain its current value of around 30% of average earnings.  
• Automatic Enrolment - Automatic enrolment will deliver a real improvement for millions of people’s retirement incomes and the Government can build on this success. To do this, it is essential that minimum overall contributions increase to at least 12% of salary by 2030, with steps taken now towards this goal. The Government should also extend automatic enrolment to include 18-21 year olds, self-employed people and those in multiple jobs paying low salaries totalling £10,000 or more. 
• Defined Benefit - The UK’s DB pensions are underfunded, with around three million people having only a 50:50 chance of seeing their benefits paid in full. The Government should bring forward legislation to reduce burdens and enable pension schemes to share services or to merge, delivering better returns, saving money and improving governance. This will mean a greater chance of members receiving their benefits. It will free employers to focus on corporate growth and it will return public confidence to the system. 
• Pension Scams - Pension scams damage people’s retirement incomes. Under current law, the scheme trustees are powerless to stop the transfer even if they have grave concerns about the risks to the member involved. To protect people from pension scams, legislation should be introduced to establish an authorisation regime for pension schemes. An individual would only have the right to transfer to an authorised scheme.  
• Help at Retirement - Decisions made at retirement are some of the most important, yet difficult, decisions to make. The Government should make it easier for trustees to signpost good quality and good value schemes or products. This will ensure that those who are unwilling or unable to make a choice have their interests safeguarded. 
• Tax Relief - Savers must continue to be incentivised to save, and any tax reform should harness incentives to save, not remove them. Further piecemeal cuts will undermine the stability of – and public trust in – the system of pensions tax relief. The Government should instead undertake a thorough, independent review of tax and incentives to save in order to seek sustainable solutions which continue the alignment of Government (both current and future), savers, employers, industry and broader society which has driven the success of automatic enrolment so far.

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