Senior figures at asset management companies have called for a flat rate of tax relief to encourage more consumer understanding about pensions, a plan which was dropped by the government ahead of the March Budget.
Speaking at the Marketforce annual conference in London today (8 June) Nigel Wilson, the chief executive of Legal & General, and Tony Stenning, managing director at BlackRock, said there a number of unresolved issues which needed reform.
Mr Wilson said the introduction of the Lifetime Isa, announced in this year’s Budget, did not go far enough.
He said: “Providing such generous tax relief to an older generation is simply inter-generationally unfair, especially as that generation will be a huge strain on NHS resources.
“It is also unfair in the sense that it is regressive. The simpler approach by far would have been to introduce a flat rate at 25 per cent or 20 per cent.”
Meanwhile Mr Stenning said BlackRock’s research showed people didn’t understand the government was effectively putting money into their pensions.
He said: “Let’s have this flat rate so it’s buy one get one free. People understand that.”
Plans for changes to the amount of tax relief savers get on their pensions were mooted ahead of the March Budget, but were eventually dropped by the government.
Mr Stenning added that BlackRock’s research found unadvised people tend to have much more in cash which provided smaller returns.
Some of the people surveys equated investing to gambling.
He said: “They need our help and we need a clear distinction between advice and guidance and to give people rules of thumb that permeate everything.”
John James, managing director of Vanguard, added: “We love being a complex industry because it makes us feel good but people who make things simple have a big advantage.”
Meanwhile Mr Wilson added that fintech in the UK has been “disappointing” and warned that companies such as Google, Facebook and Ali Baba would enter this space if existing companies didn’t act.
He also said the 75bps cap on charges didn’t go far enough and should be reduced to 50bps and said it was “really disappointing” the introduction of pot follows member had been “ducked” last year.