Improve tax breaks to boost workplace savings

The Government should look at lifting the £150 tax-free limit on independent financial advice paid for by employers. The call has come from the Association of Consulting Actuaries (ACA) as part of its submission to the Workplace Retirement Income Commission chaired by Lord McFall. The ACA argued that doing so would encourage more employers to provide employees with a better education on financial matters and savings provision.

The ACA also wants to see a change in legislation that would allow more flexibility in terms of pension scheme design. The ACA claimed that risk-sharing schemes could be made a much easier and more attractive option for many employers who are currently unwilling to take on the full risk attached to traditional defined benefit schemes.

The submission put the case, too, for helping employers get staff engaged in a number of different savings schemes such as ISAs, SAYE and share option plans. There might be scope, the ACA continued, for looking at a way of bridging the gap between ISAs and pensions in order to strike the right balance between accessibility (vital for younger savers) and locked-away saving (more important for older savers).

Stuart Southall, the ACA’s chairman, commented: “We believe it to be essential to increase financial education, beginning in schools and ultimately spreading throughout the entire population. Linked in with this is the need to change the culture of society from one of ‘living for today’ and spending everything earned to a more balanced one in which saving and long term financial planning have greater prominence.”

If you would like any help developing a workplace pension scheme or reviewing your existing provision, don’t forget that we are here to help and advise.