Fidelity: ‘Pension tax change must work for employers’

Fidelity: ‘Pension tax change must work for employers’

The government must ensure that changes to pension taxation need to work for employers as well as savers, according to Fidelity Worldwide Investment head of retirement Richard Parkin.

Ahead of yesterday’s deadline (30 September) for comments on the government’s Green Paper, Mr Parkin said the role of the employer is critical when it comes to encouraging people to save for the long term.

He said: “The strong link between the employer and savings behaviour is key; we know auto-enrolment is working and that it must continue.

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“The government needs to ensure that any changes to tax relief continue to encourage employers to support retirement saving.

“Introducing more complexity and cost for employers could lead to them disengaging from pensions with disastrous results.”

A study carried out by Fidelty in September among 2,000 UK adults with £10,000 of investible assets, and 500 with less than £10,000, found that receiving tax relief on pension contributions came eighth in a list of key factors encouraging people to save.

More than half of savers considered tax relief to be a “neutral” or “uninfluential” factor.

But 59 per cent said that the matter of employer contributions to a pension scheme was “extremely influential” or “influential” in their saving habits.

Adviser view

Richard Ross, director of Norfolk-based Chadwicks, said: “Hitherto pension tax relief has been important to encourage people to save.

“But because we have got auto-enrolment we probably don’t need a tax incentive for the majority of people anymore, so it is a good idea to look at shifting to an alternative tax basis.”