Aegon is calling for a radical shake-up of the pensions system, urging the next Government to review auto enrolment and end the "salami slicing" of tax relief.
The insurer says the current pensions framework is unsustainable and is pushing for a comprehensive re-think of the system to encourage more people to save.
In its manifesto The Pensions Crunch: proposals for change it says the next Government must ensure measures taken to plug the short-term hole in public finances do not come at the expense of neglecting the longevity challenge.
The UK's long term economic growth, it says, is threatened by a "pensions crunch" which has to be tackled now to prevent serious problems for future generations.
In order to create a sustainable savings culture, it recommends the following measures are introduced within the first 100 days of the next Government coming to office:
- An immediate halt to the ‘salami slicing' of pensions tax relief to give people confidence that the goalposts won't be moved again;
- A review of the automatic enrolment arrangements to ensure fewer people are caught by the means-testing trap;
- A review into public sector pensions to bring unfunded liabilities under control.
Over the lifetime of the next Parliament, it calls for a one-off review of savings incentives to lay the foundations of a new savings culture and the roll-out of the free-to-use Moneymadeclear financial guidance service.
According to research carried out for AEGON by YouGov polling 2,131 adults after the Budget, 60% think the Government should do all it can to maintain future generations' retirement funds even if it means extra costs in the short-term.
A significant 81% think pensions are as, or more, important in this coming General Election than five years ago.
"Longevity isn't a choice for the UK, it's a certainty," says AEGON UK chief executive Otto Thoresen. "And the question isn't whether or when we start to pay for it, but how we start to do so now. But tackling the ‘pension crunch' shouldn't be seen as an unwelcome cost challenge, rather it is part of the solution to future fiscal and economic stability."
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First mentioned in Cridland Report