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.”