Pensions - Articles - Re-distributing tax relief 'shuffling chairs on the Titanic'

 “The growing disparity of wealth between the generations is of huge concern. But re-distributing tax relief is like shuffling chairs on the Titanic. 

 “Changing tax treatment in this way is unlikely to effect the behaviour change needed. People will either default in to auto enrolment schemes with a little more relief, or they will not. Politically it might create a favourable impression among younger generations. But will it motivate them to save more? That’s unlikely. They’d have to save more to get more, and the issue is they have no spare cash to put aside and more pressing financial concerns to deal with.

 “Implementing such a system would also be fraught with difficulties and cost.

 “But we do need to find ways to apply brakes to the savings car crash looming on the horizon. Post Brexit, the number of UK workers that won’t be able to retire with an adequate income has increased from two thirds to three quarters. The biggest issue we face is that as a nation is that we’re under-saved.

 “Gross UK saving has halved in the past 40 years, household debt has tripled and consumption keeps rising. We need to restore a savings culture. The only way the problem will be solved is if there is a shift to cohesive, long-term pensions policy-making – something that has been lacking for many years.

 “While we’ve had positive steps forward with auto-enrolment increasing participation in pension savings, at the other end we have freedom and choice which leaves the door open for retirement savings to be taken as cash and spent. We can’t keep kicking the can up the road by opening up more and more routes to drive down saving levels and increase spending levels further.”