The Association of British Insurers yesterday launched its Budget for Savers initiative, just weeks before the government publishes its pensions Green Paper.
Budget for Savers sets out a series of practical and affordable proposals to help UK workers save more for retirement through the workplace.
The ABI initiative comes as new, independent research by IFF Research and Continental Research reveals as many as 16m people are not confident that their income in retirement will be sufficient. A further 9m are less confident about their pension now than they were a year ago, and 15m say they know little or nothing about pensions, including almost a half of the under-35s.
With many saying they aren't saving for retirement because they have little spare cash, the ABI's proposals are designed to help employers help their employees save for retirement. The ABI is proposing two new employer-based incentives, Advice Credit and a Pension Contribution Tax Credit.
Advice Credit could reduce the savings gap by as much as £2bn at a cost of only £100m to the government, with employers receiving a refund of their employer National Insurance Contributions to fund regular advice sessions. The Credit can be targeted at small employers and because it is envisaged that there will be sessions every five years, it will have a lasting impact.
The Pension Contribution Tax Credit has been designed to encourage employers to contribute to employees' pensions and would reduce the savings gap by around £3bn at a cost of £900m. Under this system, small employers would receive a larger credit than large employers.
Joanne Segars, head of pensions at the ABI, says: “We believe these proposals are workable
and affordable. What's more, they have the support of the very people they are supposed to
help. Employers think they would make a difference and so too do employees.”