Following the Treasury’s response to its ‘Call for Evidence’ yesterday, which stated it would not grant early access to pension savings but instead would throw its support behind ‘innovative workplace savings models’ to encourage greater saving, Paul Waters, Partner at Hymans Robertson who has been working with the Treasury on this issue said:
“One way to encourage greater saving in the workplace is to follow the example set by employer-sponsored pensions and ease the legislative requirements for workplace savings products such as corporate ISAs. Ways to do this would be to make it easier for employers to recommend default funds for such products (as with pensions now), and simplify compliance requirements such as money laundering checks. This would make it easier for employees to use and understand, as well as easier for employers to offer, reducing the burden of administration and compliance.
“Other ways products could be tweaked to make them more suitable for employers include allowing funds to be ‘locked in’ to an ISA for a period (e.g. 3 years, to allow employers to offer a genuine medium term savings product and provide funding which cannot be just spent immediately). In exchange for the ‘lock-in’, there could perhaps be an National Insurance contribution incentive for both employees and employers, in a similar vein to pensions, encouraging the introduction of such products and enabling more people to save effectively.”
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