Commenting on the IFS’s Automatic Enrolment Trends Report, Elisabeth Storey, Head of Pensions at RSM UK said: “As the new prime minister aims to address the cost of living, this begs the question of whether this will clash with the aims of the Pension Commission to encourage increased pension contributions? The IFS report highlights that 15 million people are currently under saving for retirement, and the Pensions Commission is currently considering policies to increase pension saving.

“Any additional pension contributions will impact either the employee’s take home pay, or an employer’s employment costs, or both. The third element is the government’s contribution, through pension tax relief. There may be an opportunity for the government to offer more support for increased pension saving through changes to the tax relief structure on contributions. If this was set at a uniform tax rate above the current 20%, the difference in take home pay for lower paid workers might be negligible, and it may also mean that the tax take for the treasury would not be impacted.

“To be successful, the Pension Commission’s findings would need to be addressed by wider government, not just the DWP, and the Treasury could play a big part in the solution. Interdepartmental alignment will be important, and ideally long-term cross-party support is needed to reach a satisfactory long-term solution.”

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