Financial advisers have urged the government to reduce the tax burden on people saving for retirement in anticipation of the next general election.
The call to action was revealed in the NextWealth: Managing Lifetime Wealth report, sponsored by Aegon. The report survey revealed that 25 percent of advisers want the next government to prioritise reforms that will lessen the tax burden on clients that are saving for retirement.
Nearly a fifth (17 percent) want the next government to establish a more consistent approach to implementing and overseeing pension rules, including death benefits and the lifetime allowance. And 12 percent highlighted the need for simpler rules surrounding retirement, investment and taxation.
Steven Cameron, pensions director at Aegon, said: “It’s clear from our findings that to support their retirement clients, financial advisers want a future government to reduce the tax burden for consumers. The recently announced budget cuts in national insurance (NI) by the current government will have been welcomed, but the question is what further reductions in tax might be delivered in future. While cutting NI rather than income tax preserves the generosity of pensions tax relief, it does not help those over state pension age who don’t pay NI.
“Advisers are also very mindful of the complexities of the current system. More simplification could help advisers explain current tax, pension and investment rules to their clients, while more consistency would improve their ability to advise on longer term financial planning. The future of the pensions lifetime allowance will be front of mind with the Labour party stating it would reintroduce this in some form if in government.”
Given the importance of longer-term planning for retirement, he said that Aegon “urges all political parties to set out future policy proposals in their upcoming election manifestos”.
“It’s vital that politicians avoid constant change or unnecessary disruption when it comes to planning for retirement. Financial advisers across the country want to help their clients to ‘do the right thing’ and make well-informed decisions about securing their financial future. Complexity and constant change – be it constant tinkering or radical overhauls – makes this far more difficult to achieve.”
The survey for the NextWealth: Managing Lifetime Wealth report was conducted with 200 financial advisers in November 2023.
