UK- Mercer Human Resource Consulting is urging the government to introduce radical changes to taxes and regulations governing both public and private pension provision.
In its recent budget report, the government announced a three prong approach to simplifying pensions- the regulation of private pensions, the taxation of occupational schemes and the operation of the long term savings market.
But, said Deborah Cooper, senior consultant at Mercer, “it is imperative that its three separate working groups liase closely and act coherently.”
Alan Pickering, former chairman of the National Association of Pension Funds, is carrying out a review of simplifying pensions and is due to report to work and pensions secretary Alistair Darling in June.
The inland revenue is looking at ways of reducing the administrative burdens of occupational pensions and making schemes easier to understand. Ron Sandler, former COO of Natwest Bank, is heading a review of medium and long term retail savings.
Cooper added: "for the government’s simplification initiatives to work, we need to examine the issues in a totally fresh light. In the past, employers and the pensions industry have taken on an intolerable burden of red tape, with layer upon layer of regulation built up by successive governments.
"We now have to cope with nine different tax regimes, and in final salary schemes there can be several different sets of calculations to do for each member’s benefits.
"The current position can’t continue. The government should grasp the nettle and opt for a single tax regime that applies to everyone - even if some will gain or lose more than others.”
She said the consequences would be lower administration costs for employers, a slow-down in the decline of final salary schemes and, altogether, a simpler system for all to understand.
“It will be a true investment for the long-term future of UK private pension provision."