A new report has come out and said that the savings gap in the UK will have to be addressed or the new pension freedoms won’t mean much to many in the country.
Compiled by KPMG, the study found that the two main policy levers are tax incentives and auto enrolment, although the latter’s success will not be guaranteed until levels of contribution are in line with the retirement income that people hope to have.
To handle the situation, policymakers could consider extending the coverage of auto enrolment to self-employed people, it was suggested, or implementing increased contributions, compulsion or auto-escalation.
Pension Freedoms Explained
In the 2014 Budget, the government announced changes to the ways that people could access their pensions and abolished the requirement to buy an annuity, which gave them a lot more freedom over accessing their own savings.
As of April last year, pension drawdown has been taxed at marginal income tax rates, while the tax-free lump sum continues to be available. Buying an annuity still remains an option, but those who do not want to do this can keep pensions invested in a drawdown product and be able to access it over time. To find out more information about this, seek help from investment advisers in Bristol, who will be able to give you expert assistance moving forward.
“Britain’s saving culture needs a sea change. With the UK savings ratio halving since 2012, millennials face the prospect of having little saved and no house to their name by the time they are middle aged. Policymakers need to ensure auto enrolment becomes a success, while doing their part to encourage engagement and financial literacy,” UK head of savings and wealth management at KPMG Andy Masters said.
Director of long-term savings policy at the Association of British Insurers Yvonne Braun added that giving individuals more power over their pensions will surely encourage more Britons to put cash aside to fund their retirement – but education is key over the long term.
Financial Advice Bristol
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About Us: Churchill Wealth Management is a team of independent financial advisors/financial advisers (IFAs) based in Clifton, Bristol. We provide independent financial advice, including pension advice, investment advice, inheritance tax planning and protection/insurance advice.