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AJ Bell urges Chancellor not to ‘wreck’ UK savings culture

4 October 2017

Pension provider AJ Bell has called for an independent commission on pensions tax to be formed, which could propose reforms based on the interests of savers.

Amid fears that Chancellor Philip Hammond will “take the axe to pension tax relief” in his first post-election budget, senior analyst Tom Selby warned that the embryonic savings culture in the UK should be protected not wrecked.

He said: “Pensions have suffered from years of chopping and changing of tax incentives. We have reached a point in time where the political sting needs to be taken out of the pension tax debate through the establishment of an independent commission.

“Such a commission could propose reforms based on the long-term interests of savers and in the process rid us of some of the horrific, unnecessary complexity that exists in the current system.”

Selby’s warning follows the news that personal pension contributions hit a record high in 2015/16 with 9 million people contributing £24.3 billion into personal pensions. However, individual annual contributions fell from a peak of £3,690 in 2011/12 to just £2,690 in 2015/16.

Selby said: “The Treasury’s pension tax relief bill is rising because automatic enrolment, the central plinth of the Government’s savings strategy, has been successful in boosting the number of people saving for retirement in the UK.

“However, it’s important to put the rising cost of pension tax relief in context. While a net annual bill of almost £25 billion is a scary number, the key is that average savings levels per person remain way down compared to the peak of 2011/12. It is vital that the embryonic savings culture being nurtured in the UK is not wrecked by a Treasury desperate to raise cash ahead of Brexit.”

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