Summer Budget: Pension system on probation

Summer Budget: Pension system on probation

Mike Smedley, pensions partner at KPMG, comments on the announcement of a green paper on whether pensions should be treated like ISAs.

Also on KPMG.com

Commenting on the Chancellor’s Budget announcement of a green paper on whether pensions should be treated like ISAs, Mike Smedley, pensions partner at KPMG, said:

“We are fundamentally positive about any move to encourage the public to save more for their retirement. We welcome the fact that this consultation is taking place at an early stage and that the Government is open-minded on the outcome. 

“Whatever the result, there needs to be an incentive in place to encourage people to tie up their money for long periods of time. Incentives for long-term savings need to be better than for short-term savings. If treatment was the same as ISAs it would be a back-door removal of the tax-free lump sum.“It’s essential that the individual has certainty about the pensions system. Young savers need to know that their savings won’t be raided by future governments. 

“Any changes that we see need to result in the right long-term system for savers. A change to an ISA-like tax system would benefit the Treasury, but it’s hard to see how it would encourage long-term saving. Equally, employers must stay ahead of any changes, review the savings products they provide to employees and encourage financial literacy. 

“With all of this uncertainty people may not know where to put their money. This savings landscape needs to be clear and simple, otherwise those that want to save may end up thinking the safest place for it would be under the mattress.”

 

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About KPMG 

KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 12,000 partners and staff. The UK firm recorded a turnover of £1.9 billion in the year ended September 2014. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 155 countries and has 162,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.

This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG in the UK.

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