Today’s workplace savings environment includes some disgruntled employers, a defensive pensions industry and an under-saving population deterred from engaging with an industry that is widely distrusted. What simple elixir would satisfy all parties?
In a new report The Workplace ISA, published by the Centre for Policy Studies on Friday 22 April, Michael Johnson urges the government to introduce a Workplace ISA to complement the recently announced Lifetime ISA. Auto-enrolment’s reach should then be expanded, and both the Lifetime and Workplace ISAs included within its legislative embrace.
Michael suggests that a Workplace ISA would be a powerful tool to discourage opt-outs, thereby enhancing employee engagement with saving.
The key features of the Workplace ISA:
Michael Johnson comments:
“The Lifetime and Workplace ISAs, operating together within the auto-enrolment framework, would help many people of modest means achieve a goal that was originally proposed in a 2012 paper aimed at catalysing the broad-based savings culture that the UK so desperately needs. The majority of the population should be encouraged to set themselves one simple goal at the point of retirement: to be a debt-free home owner (including no consumer debt). Thereafter, they could perhaps downsize to top-up their retirement income, and perhaps finance long-term care.
Ideally, the Workplace ISA will be announced in the 2016 Autumn Statement, after a summer spent assessing the public’s response to the Lifetime ISA, perhaps for 2018 implementation. It would, of course, compete with today’s occupational pensions savings schemes.”