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Mick McAteer: Flat-rate relief can boost self-employed pensions

Consumers not saving enough because industry has failed to meet their needs, says McAteer.

The Financial Inclusion Centre director Mick McAteer wants the Government to introduce a flat rate of pensions tax relief and use the savings to top up the pensions of “vulnerable” groups such as the self-employed.

Speaking at the Tisa annual conference in London last week, McAteer said the savings from such a move could boost the retirement incomes of those who are currently unlikely to gain from the rollout of automatic enrolment.

He said: “We spend an absolute fortune on tax relief to incentivise pensions savings in the UK. There is no evidence that encourages new pensions savings. It simply directs pensions savings into other parts of the market.

“We should limit pensions tax relief to a flat rate and use the money saved to top up the pension contributions of the self-employed and people on low incomes into Nest. The self-employed are a very vulnerable group at the moment and someone needs to step in and play the role of the employer for them.”

Separately, McAteer argued the financial services industry is largely to blame for the low take-up of savings and investments products among UK consumers

He said one of the biggest reasons consumers are not saving and investing enough is because the industry has not met their needs “fairly, cost effectively and efficiently”.

He said: “If new products are not socially useful and do not enhance consumer welfare, then the growth of new products is value extracting.

“We can now count between 11 and 12 layers of intermediaries between savers and investors and the real economy. Again, unless they add some value their very existence is extracting or destroying value for the end user, the consumer, and for the economy.

“The industry has got to get back to the job it is supposed to do, which is persuading people to do things without misselling them products.”

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. Dear Mr McAteer

    I presume you are referring to window cleaners, taxi drivers, gardeners or suchlike. After all I’m self-employed and I hardly think you will shed any tears for me!

    However if I’m right in my assumptions, then I’m afraid you need a very strong dose of reality. These self-employed form a very large part of the black economy and many work cash in hand – something that well suits both parties – the customer and the provider.

    My window cleaner spends at least 6 week of the year on holiday in sunnier climes and I know of several taxi drivers who enjoy a very nice lifestyle and even have buy to let property (without mortgage).

    I’m sure they would be grateful for the hand-outs but 25% relief (or whatever figure you are thinking of under at least 40%) will not be much of an attraction. Anyway they may have difficulty justifying the premiums!

  2. Why this bloke is allowed any sort of platform from which to utter this sort of tripe is completely beyond me. The industry has done its level best to produce decent offerings in the face of things such as the removal of contributions insurance, the removal of life insurance as an integral element of a pension plan, restrictions on input levels, restrictions on max fund size, tax on div’s, the punitive 55% death tax on unspent funds post-retirement, an absurdly complicated framework of rules and regulations, not to mention the annuity rates trap. Yet, in the mind of McAteer, all this is the fault of “the industry”?

    Who pays this guy’s salary? He’s a prize prat who shouldn’t be allowed anywhere near a microphone.

  3. Mick the Mack still around, still blowing his own out of tune trumpet????

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