AegonNov 21 2016

Aegon calls for fairness in government savings policy

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Aegon calls for fairness in government savings policy

Aegon has called for "fairness" in government savings policy to benefit those on lower incomes and not just the already wealthy.

The company said that this "call for change" had been prompted by a "perception of inequality in the system, with wealthy savers faring better from government savings policy than those with lower incomes" 

According to research conducted by Censuswide that polled more than 2,000 people on the subject earlier this month, nearly half (45 per cent) of the population deemed current savings and pension policy to be unfair.

The survey found that there was a case for focusing on helping people understand what options already exist, for example, the Lifetime ISA (Lisa), set to launch in April 2017 for those under 40.

A third (33 per cent) of the population have never heard of the incoming product, and a further 36 per cent don’t understand how it could help them. 

 Aegon stated the lack of awareness was "disappointing".

Steven Cameron, pensions director at Aegon, said: “Our research shows a consensus across all age groups that more needs to be done to encourage younger people to save for their retirement.

"This is good news. The sooner someone starts saving for retirement, the more likely they are to be able to meet their retirement aspirations.

"And unlike previous generations, they will not retire with generous defined benefit pensions"

He said to make the Lisa successful, it needs to be visible and understood, but warned if it increases opt outs from workplace pensions, young savers will lose valuable employer contributions.

“Given the constant change it’s hardly surprising that many are unaware of the incentives already in place to help people start saving early in life," he said. 

"And for younger age groups, it’s all too easy to leave starting saving till a later date. So we hope the Chancellor’s first Autumn Statement is one of reinforcement not reinvention of the benefits of saving,” he added. 

Malcolm Coury, founder and managing director of Cambridge-based Dartington Wealth Management, said: "There is both a lack of public understanding of savings products and successive government that take a very short-term view and keep changing the rules instead of taking the long-term view. They give with one hand and then take it back with another.

"Therefore, if anyone is being treated unfairly it’s actually the wealthiest people in the UK but no one has any sympathy for high earnings because the public perception is 'they can afford it'.

"Yet most high earners take very little if anything from the state, e.g. they educate their children privately, they do not use the NHS they go private, they do not receive state benefits, they often lose their personal allowance and those retiring with large pensions have had their pension funds reduced by tax of up to 55 per cent on the excess over their much reduced lifetime allowance tax charge."