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More people are contributing to private pensions year on year due to the inadequacy of the state pension, say leading audit, tax and business advisory firm, Blick Rothenberg.
Tomm Adams, a Partner at the firm, said: “HMRC has published its annual summary of statistic covering contributions to and payments from private pensions. The report shows that individual contributions to plans are up by 13% year on year, significantly higher than wage inflation, which suggests the nation’s savers are taking need to save beyond the inadequate state pension provision seriously.”
He added: “The number of members making contributions has remained reasonably stable, meaning population growth is not driving this increase, which indicates a growing understanding that the state’s provision for retirement is woefully inadequate. The state pension only covers around 20% of the average earner’s income into retirement, one of the poorest provisions in the developed world.”
“At the same time, tax and National Insurance Contribution (NIC) relief is only up by 8%, which is indicative of frozen tax allowances both in pensions and more widely across the UK tax regime, and evidence of ‘fiscal drag’ or stealth tax rises the UK has been subject to by successive governments.
However, the ability to save for the future is a question of affordability, and while the Chancellor is investing significant resources in researching value for money in private pensions, she mustn’t take away tax reliefs in her October Budget. This would be counterproductive; disincentivising saving for later life will only put pressure on the future generation’s wallets.”
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