Standard Life : calls for flat-rate incentive for pensions

Standard Life is calling on the Government to introduce an incentive-led pensions regime rather than one based on the current system of tax relief.

In its response to the Government's consultation on pensions tax relief, the leading long-term savings and investment company proposes moving to a new flat-rate incentive on employee contributions.

Standard Life has put forward a new 'Incentivised-Exempt-Taxed' (IET) model - in contrast to the mooted TEE ISA-style regime or the current EET system.

A flat-rate incentive of 33.33% - expressed as 'you pay £3 and the Government pays £1' is equivalent to tax relief at 25% under the current regime.

Jamie Jenkins, Head of Pensions Strategy at Standard Life, said: 'Our proposed flat-rate incentive is the best chance we have of driving the levels of retirement saving needed to ensure that UK consumers are adequately prepared for retirement. This simple and clear single rate incentive system would help engender greater personal responsibility by driving better understanding of, and ultimately engagement with, pension saving.

'The financial benefit of paying into a pension becomes much clearer and easier for people to understand. A single rate incentive system offers the opportunity to position the Government contribution like the employer contribution, creating a powerful matching incentive to save. Moving to our proposed model will minimise disruption and will ultimately support the ongoing success of auto enrolment. It can be easily administered through 'relief at source' arrangements, which are widely used for workplace pensions today.'

Jenkins: 'We believe a flat-rate incentive at 33.33% is both fair and sustainable.

'Incentives should be targeted at those people for who saving is most difficult, but equally any system must be affordable for government such that it doesn't require

Jenkins: 'We firmly believe that a move to a TEE regime would be detrimental for pension saving. Pensions would no longer enjoy tax privileges over ISAs so many people would not voluntarily lock up their wealth until retirement.'

'Even if some kind of upfront incentive was applied to a TEE system there is a genuine concern that future governments would be under pressure to tax income in retirement, leading to uncertainty for people saving now.'

'A move to a TEE system could undermine the success of auto enrolment into workplace pensions, with more generous employer schemes potentially being reduced to the bare minimum contribution levels.'

-ENDS-

Media enquiries

For further information, contact:

Claire Burston, Head of PR, Standard Life
Email: claire_burston@standardlife.com; Tel: 0131 245 5078; 07738 301004

Amy Cayzer, PR Manager, Standard Life
Email: amy_cayzer@standardlife.com; Tel: 0131 245 5307; 07710 399770

About Standard Life

• Standard Life is a leading long term investment savings business, dedicated to helping to build a more prosperous world and enabling people to have confidence in their own future. This has been important to Standard Life since it was established in Edinburgh in 1825.
• Since then, Standard Life has been growing globally. Today, the Standard Life Group employs around 6,500 people internationally - through businesses in the UK, Europe, North America, Asia and Australia.
• Around 4.5 million customers worldwide trust Standard Life with their financial future and the business is responsible for the administration of £302 billion of their assets (as at the end of June 2015). Standard Life supports a further 20 million customers through its Chinese and Indian joint venture businesses.
• The Standard Life Investments brand offers truly global asset management expertise with strong investment capabilities.
• Wherever Standard Life operates in the world, it is motivated by a sense of responsibility. That is what has helped it be a sustainable business over the long term. Standard Life is proud to be listed as a leader for corporate sustainability in its industry in the Dow Jones Sustainability Indices (DJSI World and DJSI Europe).
• In the UK, Standard Life offers a range of individual and group pensions, SIPPs, ISAs, annuities, life assurance, offshore bonds, investment management, wealth management, tax and estate planning services. By understanding and offering innovative products and the right support, Standard Life makes it easier for its customers and clients to plan ahead and feel more confident about the future.
• Standard Life plc is listed on the London Stock Exchange and with around 1.2 million individual shareholders in over 50 countries around the world. It is one of the top 500 companies worldwide, by revenue, as listed in the 2015 Fortune Global 500.
• You can follow Standard Life Group on www.twitter.com/StandardLifeplc

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