Analysts at the Centre for Economic and Policy Research say their work suggests government and industry really have no idea about how to encourage long-term savings and may be putting forward policies that could be extremely damaging to pension savers
Just for starters, the research suggests there is no firm link at all between tax incentives and long-term savings, with “no convincing evidence” people increase savings by more than the tax subsidy involved, the CEPR says.
The demise of final salary schemes may be causing angst, but the evidence suggests few workers in DB schemes are actually more efficient than those without, while implementation of a Pension Protection Fund is simply going to result in the transfer of subsidies from strong companies to weak.
Most damning of all, CEPR's research suggests there is little evidence people run down savings rapidly in retirement. At the same time, however, the current system “probably forces people to use too much of their pension wealth to buy annuities,” the Centre says.
And pension fund managers who increasingly talk about switching to fixed income are plain wrong, the research suggests.
”The review argues that concerns about a melt-down in the stock market as the growing number of elderly try to cash in their savings are grossly exaggerated,” the CEPR adds.IFAonline
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