Consumers should be given more information on coming pensions legislation if the government wants to incentivise people to save for their retirement, urges the Association of British Insurers.
In a response to the Pensions Bill published in February this year, the ABI has issued a briefing, suggesting the Revenue should consider making a number of amendments to the Bill as it currently "does not go far enough".
For a start, the ABI says the details on how the new '£400m rescue scheme' - which will provide for pension scheme members who have already lost some or all of their money - will work need to be clarified as they still are "extremely vague".
Issues such as what time limits will be imposed, which pension schemes will be eligible and what proportion of people's lost pension pots will be paid are all still waiting to be resolved, the ABI says.
Moreover, the Bill should also spell out how long it will take for the new Pension Protection Fund (PPF) to be fully working and clarify the exact date by which the risk-based levy will be fully implemented.
The latter should be specified so that well-run schemes will not be obliged to pay more than their fair share towards the Fund, the Association says.
Other changes which the ABI suggests should be made include enhancing the requirements on the new Pensions Regulator to consult on its draft Codes of Practice as well as further measures to reform the structure of state pensions and encourage pension contributions from employers.
However, even if the Revenue would implement the suggested amendements, ABI's head of pensions Jo Segars still believes the Bill will fall short in mending the current savings gap.
She says: "Reforms such as the new Pensions Regulator, the abolition of compulsory LPI on DC schemes and the Pension Protection Fund are welcome changes that will encourage saving. But the savings gap is so large that the changes in the Bill alone will be insuffient to ensure that as many people as possible have an adequate retirement income."IFAonline
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