Comment from TISA, the financial services membership association in response to the Budget
David Dalton-Brown, Director-General of TISA said: “Whilst we welcome the Government’s continued focus on long-term saving and investing, it’s crucial that the means to do so is made as simple as possible. The prospect of pensions and ISAs being treated the same way and making the transfer of pensions smoother and quicker is excellent news for long-term savers. Indeed, it is something we have been seeking to achieve for some time.
“The proposed consultation on pension tax relief is very welcome and something we have being calling for through our TSIP project. This process should focus on how to best secure increased levels of savings for consumers, especially with a focus on those who are currently not saving enough.
“We look forward to continue to work closely with the Government and on behalf of our members from across the financial services industry to develop innovative initiatives to encourage more people to save for the longer-term. It is essential that any new policies and initiatives are carefully considered to ensure that there are no unintended consequences to hard working people.
“In terms of the proposed changes to pension tax relief, we believe that the Government should scrap the lifetime allowance completely. It is unnecessary with an annual allowance and acts as a deterrent to pension saving.
“We have already sought clarification from HMT on whether the proposed Dividend Allowance will have an impact on personal savings allowances. However, anything which allows people to retain more of their hard earned cash is good news.
“TISA initiated The Savings and Investments Policy project (‘TSIP’)*, an unprecedented alliance of over 50 financial services companies, trade bodies and consumer groups which has been developing policies to encourage more people to save and invest. The project will play the key role in our input to the Government’s consultation.”
Tony Stenning, Chairman of The Savings and Investments Policy project and Head of UK Retail at BlackRock says: “We have proposed two changes to the Government based on behavioural scientific observations. It’s our belief that they would enable Government to more efficiently spend money on pension tax relief whilst driving greater levels of savings amongst households on lower / mid income levels who most need help to save.
“The current system of tax relief on pension contributions could be replaced with a Government matching contribution. This should be highly visible, and international studies show that matching contributions attract greater numbers of savers. Quite simply it puts saving in a language that people understand.
“Additionally, people respond to targets, even if they are artificial. So we also propose a flat bonus contribution, paid by the Government into your pension plan, if you meet a target level of savings. That target, set by the Chancellor, should be stretching yet achievable, and should be designed to focus the minds of those that most in need to save more for their long-term future. We think this could change behaviour amongst the third of the population that have less than £250 in savings today.
“We’re delighted the Chancellor will be publishing a Green Paper on savings and investing and we, as a pan-industry group, will be proposing some innovative policies that respond to his call for ‘radical change’.”
Ends….
For further information please contact:Alistair Kellie – Telephone: 020 7680 6558/Email Alistair.Kellie@newgatecomms.com
Sara Lyons – Telephone: 020 7680 6550 / Email Sara.Lyons@newgatecomms.com
Nick Morris – Telephone: 020 7680 6557/Email Nick.Morris@newgatecomms.com
Email: TISA@newgatecomms.com
Notes for Editors
TISA is a not-for-profit membership association operating within the financial services industry. We represent the interests of over 147 member firms involved in the supply and distribution of savings and investment products and services.
TISA has a highly successful track record in working cooperatively with government, regulators, HMT, DWP and HMRC to improve the performance of the industry and the outcomes for consumers. Policy and regulation continues to be the major focus for our members with regard to corporate responsibility.
TISA and its members’ remit is evolving into a clearer focus on pro-active consultation in the regulatory world in order to influence policy and associated regulation before its creation, rather than reacting to issued policy directives. This will help to ensure a more considered policy creation from the authorities.
*The Savings and Investments Policy project is working with a wide range of financial service companies, trade bodies and consumer groups to develop these pan-industry proposals. It is directed by an Executive Committee formed of 16 leading financial services companies including Aviva, AXA Wealth, BNY Mellon, BlackRock, Ernst Young, Henderson, J.P. Morgan Asset Management, L&G, Lloyds Banking, Nationwide, Northern Trust, Old Mutual, Pinsent Masons, RBS, Threadneedle Investments and TISA.