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Topics: Tax relief| Pension| savings gap| Ros Altmann
Replacing tax relief on pensions with a matched savings scheme and setting up a “no-lose lottery” could help plug Britain’s savings gap, a think tank said.
The current tax relief system only encourages saving amongst those already inclined to save, the Social Market Foundation (SMF) said in its report Savings on a shoestring: a whole new approach to savings policy.
The report said a matched savings scheme where the state puts in a capped additional amount for every pound paid into a pension would be more progressive than the current system.
It added a matched savings scheme would be cost-neutral to the taxpayer and more likely to encourage people to proactively save than offering tax relief, which was too complicated.
SMF also suggested a lottery system where people were guaranteed people a 50p return on a £1 ticket which would automatically form part of their savings.
The remaining 50p would go towards a prize fund, with a live draw to build excitement.
This builds on an idea put forward by Saga director-general Ros Altmann in May to use a lottery, paid for by the industry, to incentivise saving.
Other SMF recommendations included the creation of a "save more tomorrow" scheme where employees agree to put any salary rises directly into a savings account, and giving shares in public assets like banks or roads to the public.
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| Comment | Call to scrap pensions tax relief to boost saving |
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No-Please
The matched savings scheme whilst a good idea could be fraught with troubles. What time frame would it be over, is the matched part lost if withdrawn within a year? People who are willing and educated to will save as well as pay into pensions. The lottery idea is not agood one predominately because it encourages gambling, potentially with money that people cannot afford to lose, or lose half of. It is, in my opinion, better to educate people better ideally starting with those in the last couple of years of compulsory secondary education.
Posted by: Simon Frost
Disgraceful
Scrap tax relief? Hey why worry about that iceberg while we've got these deckchairs to rearrange ? As for the lottery it is one of the crassest, stupidest, most contemptible ideas I have ever heard. Yet another step towards the realisation of the UK as a nation of spivs. Utterly disgusting
Posted by: Pete
Rubbish from start to finish
If these are the "highlights" of the SMF report I'd hate to read the rest of it. It's astonishing to me that people can actually get paid to write the sort of utter drivel that this report contains. The SMF seem to assume it's okay to suspend not only the laws of economics but also the laws of mathematics and logic. Blithering idiots.
Posted by: Doug
Pardon
Ask the think tank to think and engage financial brain before ofering "think tank news" - if the powers at be wish to attain a status whereby people are willing to listen to them then maybe they should consider asking the people in the know - why dont they invite retiring advisors from all sectors of the industry to make up a "Think Tank Quango" which could apply hundeds of years of knowledge and personal experince to the thought process - or would that maybe cramp the style of a knowledgable civil servant
Posted by: Murray
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Scrapping pensions tax relief
I've never heard so much twaddle in all my life - it must be April 5th surely!? Axing tax relief on pension contributions would be a blatant move to penalise those who appreciate the need to save for retirement and take control of their own future. These 'proposals' would be yet another sop to those who can't afford to save. If they can afford a 'lottery ticket', Euromillions is likely to be far more appealing. I can only assume this 'think tank' came up with the idea after a leisurely liquid lunch!
Posted by: Richard