Pensions analyst calls for creation of annuities auction house

Incoming Pensions Minister Ros Altmann has been encouraged to include a new Workplace ISA into the auto-enrolment legislation by the Centre for Policy Studies. Pensions analyst Michael Johnson urged Dr Altmann to continue with the bold reforms that her predecessor Steve Webb began.He also called for a not-for-profit national annuities auction house to automate the process of shopping around. He said this would add to pricing tension and transparency.Mr Johnson has come up with 16 suggestions that focus on "encouraging the rebirth of a savings culture" and said these are all "at least cost-neutral" for the Treasury.He said they would "lead to both greater independence and prosperity for individuals in their retirement and greater sustained economic growth for the whole nation".{desktop}{/desktop}{mobile}{/mobile}His recommendations include:• Simplify the regulatory framework.• Establish a grand vision for saving. Suggestion: to encourage a broad-based savings culture, with the aim of raising the nation's household savings ratio from 5.9% (Q4 2014) to the 1980's average of 13%, say.• Include ISAs in the auto-enrolment legislation, branded the Workplace ISA.• Replace today's tax relief framework for pensions contributions with a simple 50p per £1 saved, up to an annual allowance of £8,000, paid irrespective of taxpaying status. Cap total combined annual ISA and pensions contributions at £30,000 and scrap the lifetime allowance.• Rapidly increase today's private pension age of 55 (scheduled to rise to 57 in 2028) to 60 in 2024, i.e. by a year every two years, commencing in 2016.• Monitor the roll-out of auto-enrolment into workplace pensions, particularly SMEs' opt-out rates.• Rapidly sort out the small pots problem. Scrap Pot-Follows-Member in favour of aggregation.• Establish a few "value for money" benchmarks, then identify the key policy levers that would help deliver them when (i) accumulating and (ii) accessing savings.• Encourage NEST (and its competitors) to develop a collective drawdown capability to enable retirees to pool their longevity risk.• Establish a not-for-profit national annuities auction house to automate the process of shopping around, adding to pricing tension and transparency.• Simplify the tax framework: combine National Insurance Contributions (NICs) and Income Tax into one Earnings Tax.• Signal that the triple lock indexation of the State Pension (the maximum of earnings, prices and 2.5%) will cease in 2020, to be replaced by CPI.

Pensions analyst calls for creation of annuities auction house

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