UK - The introduction of further incentives will fail to end the pensions crisis and increase inequalities by providing extra help for the well off, warns the Trades Union Congress (TUC).
The TUC estimates the government already spends £27bn on tax incentives each year and that about half of this sum goes to upper rate taxpayers.
TUC general secretary Brendan Barber (pictured) said: We already have huge incentives to save for retirement, but they are not working. Instead of the further help for the better off that new incentives would provide, the government should phase in compulsory savings for employers and employees.
“A better state pension would give everyone a firm foundation on which to build a pension.
Pensions incentives simply switch cash from other savings vehicles, added the TUC. It said the concept of voluntarism had failed and that if the government was serious about increasing pensions it would have to introduce compulsion.
On the concept of compulsion, a survey from the Association of Consulting Actuaries (ACA), reported that 46% of DC schemes and 39% of DB schemes would consider moving to auto-enrolment, but ACA expressed scepticism this would happen unless pension reform was accompanied by a package of new incentives targeted at employers to encourage occupational provision.
In its final representation to the Pensions Commission, which is due to report at the end of November, ACA recommended a radical review of the state pension and an incentive-led strategy.
Chairman Adrian Waddingham said: “Consolidation of the state pension at a higher level, a move over time to later retirement ages and new incentives to boost private pension saving are policies voiced by many organisations.
“New incentives to boost private savings on top of a better state pension will be essential - we believe this is a much better approach in a free society than compelling employers and people to save. “
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