Friends Provident chief executive Trevor Matthews today urged the UK Government to embrace the Australian life cover model.
In a speech to delegates at the 12th 'Future of Life Assurance' conference, Matthews says the advent of Personal Accounts presents a "gold-plated" opportunity for the Government to extend life cover in the UK.
He says the nation can learn from its antipodean cousins and build on the Australian model, which sees a small weekly premium per person from the employer secure significant life cover for younger employees, which scales down as the employee gets older.
"The advent of Personal Accounts is a gold-plated opportunity for our industry to add value, but one which- if we are not careful- could be squandered," he told a room of more than 200 delegates.
"We have to ensure all that is good about the current pension provision remains intact and is a starting point for future enhancements.
"And life cover should also be considered. People need it, yet it doesn't currently feature in the Government's proposals.
"Personal accounts give us an opportunity to extend life cover cost effectively. We could do well to look at the Australian model."
Matthews also says the Government's bid to engender a 'save now, spend later' culture is "broken" following its u-turn on tax relief for pensions.
He told delegates the financial services industry must now "grasp the nettle" and work harder to create incentives to encourage people to plan for their retirement years.
In last month's Budget, Alistair Darling announced he will restrict higher-rate tax relief on pension contributions for people with incomes over £150,000 from April 2011.
The Chancellor said, for incomes above the £150,000 level, the value of pensions tax relief will be tapered down until it is 20% for those on incomes over £180,000.
"Tax relief on contributions was a way of the Government saying to everyone, and I mean everyone, irrespective of earnings, that 'saving for your pension is a good thing and we will encourage it'," Matthews says.
"Now that contract has been broken, and if it can be broken for one segment of savers now, it can be broken for others sometime later."IFAonline
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