The Government and employers could create £100 billion a year for the UK through a package of “bold” proposals to unlock money from pensions, according to a new policy paper from Hymans Robertson.
As the Government makes plans for phase two of the Pensions Review, ‘The Untapped Potential of Pensions’ paper outlines a raft of potential policy changes that could help the Treasury reap billions of pounds.
Proposals include unlocking £22 billion annually through tax changes on pensions that do not impact take home pay or pension; the development of collective pension savings; the use of DB pension surplus to gain over £400 billion for UK investment and ensuring sustainable state pensions.
Hymans Robertson has calculated that the Treasury could gain up to £28.5 billion a year if all these changes were implemented, while employers would benefit by up to £14.2 billion.
Across 10 years, and with private capital crowded in, the pensions and financial services firm said this could create a £1 trillion UK National Wealth Fund, plus the financing needed for the UK’s net zero transition.
It would also enable the enhancement of auto enrolment and pensions for the self-employed, while offering better retirement incomes for employees.
Calum Cooper, head of pension policy innovation at Hymans Robertson, said: “The promised second phase of the pensions review presents an opportunity to make lasting changes to give people financial independence in later life for as long as they live. But it’s also an opportunity to meet other important aims, such as improving equity, unlocking tens of billions of pounds annually and investing in UK economic growth at a huge scale. This is a once-in-a-generation opportunity to align pensions policy with national prosperity.”
Cooper said the change would be a “huge job” for the pensions industry but noted that “the risk of inaction and the opportunity is also huge.”
“Our proposals are bold but they’d deliver financial security for workers, cost savings for employers and a massive boost for the UK economy,” he added.
Main image: chris-lawton-3Ik7xWYJv3U-unsplash
