AEGON is calling on whichever party wins the election to make the tough choices needed to deal with the demands of an ageing population.
AEGON is highlighting that the UK’s long term economic growth is threatened by a ‘Pensions Crunch’ which needs to be tackled now to prevent serious problems for future generations.
With short-term pressures on the fiscal purse uppermost in politicians’ minds, AEGON warns they should not focus on the aftermath of the credit crunch at the expense of the growing pensions crunch.
In its Pensions Manifesto - ‘The Pensions Crunch: proposals for change’ – published today, AEGON sets out the policy proposals it recommends the next Government adopts to deal with the challenges ahead.
AEGON believes it’s vital that measures which look to plug the short-term hole in the public finances do not come at the price of neglecting the longer-term need to tackle the longevity challenge. Research carried out for AEGON by YouGov after the last Budget showed almost six out of ten (59%) respondents agreed the Government should do all it can to maintain future generations’ retirement even if it means extra cost in the short term.
Significantly, more than four in five people (81%) think pensions are more important (38%) or of at least the same importance (43%) in this general election compared to the election five years ago.
AEGON suggests the existing UK retirement framework is now unsustainable and is calling for a comprehensive rethink of how to get people saving more and help them make the most of their assets in later years. It believes the current ‘piecemeal approach’ to pension policy sends out the signal that the goalposts can be constantly moved. The same research found around half of respondents thought it likely that, following recent restrictions for the better off, a new Government would restrict pension tax breaks for more people in future.
AEGON recommends the incoming Government takes the following action to tackle the pension crunch and create the groundwork for a sustainable savings culture:
In the first 100 days
Call an immediate halt to the ‘salami slicing’ of pensions tax relief to give people confidence that the goalposts won’t be moved again.
Undertake a review of the automatic enrolment arrangements, to be introduced in 2012, to make it easier for employers to maintain existing schemes and to ensure fewer people are caught by the means-testing trap.
Commission an urgent review into public sector pensions to bring unfunded liabilities under control.
Over the lifetime of the next Parliament
Undertake a one-off review of the incentives to save – both financial and behavioural – to lay the foundations of a new savings culture.
Rethink the retirement landscape, breaking down the artificial barriers, such as tax rules, to let people make the best use of their assets to match the income needs of longer retired lives.
Ensure consumers have access to the advice and guidance they need by committing to a full national roll-out of the free-to-use ‘Moneymadeclear’ financial guidance service.
Otto Thoresen, AEGON UK chief executive, says:
“Pensions policy is more important now than at any time before due to the pressures on the economy from an ageing population. Longevity isn’t a choice for the UK, it’s a certainty. And the question isn’t whether or when we start to pay for it, but how we start to do so now. But tackling the ‘Pension Crunch’ shouldn’t be seen as an unwelcome cost challenge, rather it’s part of the solution to future fiscal and economic stability.
“That means making sure investment in providing for an ageing population is made as efficiently as possible, and shaping policy so it tackles the barriers to businesses, individuals and the public purse all paying a fair share. These barriers might be the signals people get from tax policy, the costs to the Exchequer of unfunded public sector pensions and the costs businesses face implementing the forthcoming pension reforms of automatic enrolment and mandatory employer contributions.
“Without action millions of people will continue to be condemned to poverty and State dependence in old age. That’s unacceptable. There has been a degree of consensus around Turner’s pension reform proposals. We need to build on that to create the framework for a sustainable savings culture in the UK.”
For further information:
AEGON Press Office
Tel: 0131 549 6798
Mobile: 07740 897527
Figures from YouGov plc. Total sample size was 2131 adults. Fieldwork was undertaken 24-26 March 2010. The survey was carried out online. The figures have been weighted and are representative of all GB adults (aged 18+).
In the UK AEGON offers pensions, life insurance, asset management and financial advice to around 2 million customers. AEGON UK has assets under administration of £56 billion and employs approximately 4,900 staff.
AEGON is one of the world’s leading insurance groups with approximately 30 thousand employees world wide and 40 million customers in the Americas, Europe and Asia. AEGON's revenue generating assets totalled EUR 361 billion at December 31, 2009.