The next UK government has been urged to adopt five pension policy priorities to address key issues created by recent pension reforms.
Human resource firm Buck Consultants at Xerox said the issues included insufficient pension contributions and the need to maintain long-term stability.
The five pension policy priorities involve creating an independent pensions authority, increasing the size of pension accounts, a review of the pensions tax relief regime, encouraging the involvement of employers in employees' retirement and greater provision for the self-employed.
Kevin LeGrand, head of pensions policy at Buck, said: "We are at a watershed with workplace pension provision. The next round of policies could either build a strong focused pension system providing decent levels of benefit, or bury them in a general savings system where short-term decisions prevail."
Buck's five pension policy priorities:
- Create an independent pensions authority to help maintain long-term stability. Buck said the exact format, role and responsibilities of this authority should be determined in a forum early in the new parliament.
- Drive an increase in the size of pension accounts. The firm argued the aggregate annual contribution under automatic enrolment should be set to target the minimum living costs level. In addition, auto-escalation should be set as default of contributions.
- Review the pensions tax relief regime, to give it proper focus and make it more robust for the future. The firm said tax relief was a constant target of politicians "looking to save money" and the negativity this creates undermined pensions. Buck suggested the abolition of the lifetime allowance as one key change.
- Encourage the involvement of employers in the provision of retirement income. The firm said when developing policies the government should consider the impact these have on employers. It said: "Key elements would include financial encouragement through the tax system, and simplicity in administrative and regulatory requirements."
- Enable greater provision for the self-employed. Buck said this group had "poor pension coverage" and should be brought into automatic enrolment and auto-escalation.