Replacing TESSAs and PEPs with ISAs and TOISAs, adding the Childs Trust Fund, stakeholder pensions and now Sandler just adds to confusion and avoids the main issue – that people don't want to save for their future or are just unable to, says Chase de Vere Financial Solutions.
Anna Bowes, investment manager, says: “The latest proposals, with a 1.5% cap, may entice more product providers into the market. But we are concerned as to whether they will entice more people to actually set aside money for their old age.”
Already with stakeholder pensions, there is a clear market amongst those who can afford to take advantage of tax benefits. Many middle class families, with one non-earner or with children, occasionally squirrel away money, up to £2,808 per year each.
But contributions are infrequent and more likely to be done for tax, rather than for genuine long-term planning reasons. And it is doubtful that many life companies are making money on investment patterns such as these.
Chase de Vere's recent survey of 1,001 British workers showed the majority are concerned about their pensions, even if many of them don't know whether they have their own pension plans, who contributes and how much.
Bowes adds: “84% of workers support compulsory pension contributions, with 74% still welcoming this even if they are also required to contribute themselves – an issue that bureaucrats and politicians have ignored for too long. Without strong motivation to contribute, why should the new proposed products make real progress towards ensuring a healthy and wealthy retirement for the nation?”