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18 Jan 2017

Industry concerns over government savings advice

Pensions industry experts have voiced their concerns about a new government leaflet offering savings advice, arguing that it promotes Isas while failing to mention pensions as a savings option, the Financial Times reports.

The leaflet – ‘Ways to save in 2017´ – was published on the government website by HM Treasury. It explains how the government is “supporting people to save at every stage in their life,” whether they are parents saving for their child, or a young person saving to buy their first home.

While the material mentions the Junior Isa, the Help to Buy Isa, stocks and shares Isas, the new Lifetime Isa and even Premium Bonds, it does not make reference to pensions or other bank savings products.

This has sparked concern among experts such as pension provider Aegon, who claims that the Treasury is effectively using the leaflet as a “promotion of saving through the ever-growing list of Isas.”

There is particular concern regarding the promotion of the new Lifetime Isa, which is set to launch in April and is aimed at savers under the age of 40, offering a 25% bonus for those saving for their first home or retirement.

The decision to give the Isa a specific retirement element means it is “no longer possible to separate out saving through Isas from pensions,” argues Aegon pensions director Steven Cameron, who is urging the Treasury “to bring balance to the leaflet by also highlighting the benefits of saving through workplace and other pensions.”

Meanwhile, former pensions minister Ros Altmann is reportedly “horrified” by the leaflet, which she says supports her earlier concerns about the Treasury´s attitude to pensions.

“It suggests that our private pension system is under existential threat,” she warned.

Business lobby group The CBI is similarly troubled by the leaflet´s content. Its main concern is that “for the vast majority of working people, the single best, and most rewarding, way to save tax efficiently for retirement is through their employer-provided pension” – but this savings route has not been included in the government´s advice.

The treasury defended the leaflet by arguing that its intention was to highlight the policy changes coming into effect this year, raising public awareness of the products that will be available to them.

“It goes without saying that the government supports pensions — that´s why we introduced auto enrolment, which is already benefiting over 7 million people, and our landmark pension freedoms,” it added.

Copyright M2 Bespoke 2017

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