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Simply meeting people’s financial needs

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Eloise Henderson
Head of Strategic Communications
T: 01293 205335
M: 07741 384460

Blaise Tapp
Media Relations Manager
T: 01293 205336
M: 07388 943700

Almost three quarters (74%) of working age people with a pension either do not understand or have never heard of the tax relief that they receive on their pension contributions.

A YouGov survey for The People’s Pension has found that 59% of pension savers had heard of it but did not have a good understanding of what it meant, while 15% had never heard of it.

This was borne out by half (50%) of those with a workplace pension saying that they would be more likely to increase the amount they saved into their pension if they received tax relief on their pension contributions – despite the fact most savers are already receiving this.

Only just over a quarter of working age people with a pension (26%) had heard of tax relief and said they had a good understanding of what it meant.

These findings come despite widespread publicity about pensions following the introduction of the freedom and choice reforms in April and the launch of the Chancellor’s consultation into tax relief at the Budget in June this year.

The survey found strong support for a system where the government matched savers’ contributions. Almost two thirds (62%) said that they would be more likely to increase the amount they saved into their workplace pension if the government matched their contributions.

Employer support for pension saving was also popular with nearly six in ten (59%) saying that they would be likely to increase the amount they saved into their pension if their employer increased their contributions too.

The survey, carried out online, also revealed that over half (55%) of working age people with a pension think that the government should help everyone save enough to achieve a minimum retirement income. Just 9% thought that the government should not help anyone to do so.

Darren Philp, Director of Policy and Market Engagement at The People’s Pension, said:

“This research confirms that tax relief is not well understood and calls into question whether it is really acting as an incentive to save. Incentives only work where they are clear and understandable. Unfortunately the current system is just not up to the job.

“The government’s consultation is a great opportunity to shape a system that will stand the test of time and provide a clear framework for encouraging saving. The government needs to think carefully about how it rewards people to lock money away, sometimes for decades, and make sure that it does so in a fair and consistent way. We need a system that treats all forms of savers, no matter whether they save in a defined benefit or defined contribution scheme, equitably.

“As smaller employers begin to stage for auto-enrolment, millions of people will be enrolled into a pension for the first time. Using the tax system to reward the savings that people make, in whatever form the government choose to pursue them, will be important in making sure people maximise their savings for later life.”