Pension taxation changes alone will not solve UKs 9 trillion retirement savings gap

New pension taxation won't solve UKs savings gap

Stewart Hastie, pensions partner at KPMG, commenting in response to the Government consultation into the UK’s pensions taxation system and what incentives should be offered to savers, which closes today.

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Stewart Hastie said: “The debate on whether to go “Exempt-Exempt-Taxed” (EET) or “Taxed-Exempt-Exempt” (TEE) is missing the point.

“Both can be designed to solve the complexity and inequalities of the current system. Designed correctly, both can improve outcomes for savers to help address our £9 trillion long-term savings gap. However any transition, particularly to TEE, must have sufficient lead time. Ideally five years, but no less than three.”

“The real question now is whether Government commits sufficient funds to incentivise long-term savings, or use this as an opportunity to accelerate and increase tax revenue and defer the problem to future generations. “We would like to see the Government introduce the ability to consolidate pension schemes to make it simple and cost effective for individuals.

“Employers deserve more incentives, given their increasingly important role encouraging long-term savings and in helping bridge the consumer advice gap.

“Finally, there must be new approaches for getting those outside of regular employment to benefit from incentivised retirement saving including carers, temporary and itinerant workers, sole traders and the self-employed.”

Earlier this week, KPMG published a study in partnership with the Association of British Insurers into the UK’s long-term savings gap. The report called for the Government to provide a sustainable strategy to encourage long-term savings, in response to the pensions flexibility reforms.


Notes to editors:

For further information please contact:

Simon Chan, PR Assistant Manager, KPMG

T: +44 (0) 207 694 2024

M: +44 (0) 7747 564 737


KPMG Press Office: 020 7694 8773

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.

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