AEGON UK chief executive, Otto Thoresen, is today urging the Coalition Government to turn its back on its predecessor's piecemeal approach to pension and saving reform and carry out a holistic review of what motivates people to start saving and keep on saving.
Speaking at a Fringe meeting at the Liberal Democrats party conference, alongside pensions minister Steve Webb MP, Thoresen will call on the Government to do more to create a sustainable savings culture in the UK.
AEGON believes the Government has already made significant progress in reviewing some of the urgent aspects of pensions legislation, such as proposals for restricting higher rate tax relief and for automatic enrolment into pension schemes. However with additional reviews of the 'age 75' annuitisation rule and the default retirement age Thoresen believes the Government risks falling into the same trap as the previous Government by perpetuating a piecemeal approach to pension legislation.
Thoresen will warn that this type of approach undermines saving as it gives people the impression that the goalposts can be constantly moved. Instead he will call on the Government to harness the momentum for change by conducting a thorough review of what motivates people to start, and keep on, saving.
Thoresen will call on the Government to:
* re-examine the way financial incentives for saving and investment – such as tax relief for pension contributions and tax breaks for ISAs and investment in domestic property – fit together.
* consider the behavioural aspects of how people approach financial decision making. This can be harnessed, for example using automatic enrolment to harness the power of inertia. But at other times people's built-in biases and prejudices need to be overcome to help them achieve better financial outcomes.
* urgently look again at the need to develop different advice models. AEGON is concerned that the financial landscape is getting more complicated while the Retail Distribution Review threatens to limit access to advice to fewer people.
Otto Thoresen says:
'The UK faces huge challenges in dealing with the demands of an ageing population and creating the groundwork for a sustainable savings culture. The Coalition Government and the wider population are showing increasing appetite to tackle these challenges but we must go about it in the right way.
'We have a unique opportunity to harness the momentum for change and make a real difference to people's financial security. But we can only do this by ending our piecemeal approach to savings legislation. We must take a fresh look at what financial incentives and behavioural aspects encourage people to save, and make sure good financial advice is there for everyone who needs it.'
Notes to editors
* Otto Thoresen is speaking at an AEGON sponsored meeting at the Liberal Democrats party conference – Saving Britain: Will the UK ever achieve a savings culture? – organised in conjunction with Social Market Foundation. Other speakers are Steve Webb MP, Maggie Craig (ABI), Norma Cohen (FT) and James Lloyd (SMF).
* In the UK AEGON offers pensions, life insurance, asset management and financial advice to around two million customers. AEGON UK has assets under administration of £53.6 billion and employs approximately 4,000 staff in its life and pensions business, of which 2,400 are based in Edinburgh.
* As an international life insurance, pension and investment company based in The Hague, AEGON has approximately 28 thousand employees world wide and 40 million customers in the Americas, Europe and Asia. AEGON's revenue generating investments totalled EUR 409 billion at 30 June 2010.
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