Savings incentives in the UK need to be increased to help people put money away, says AEGON.
In a report launched today, ahead of the emergency Budget, AEGON suggests the Government should resist further tinkering with pensions tax relief and seek to create much needed stability by conducting a thorough review of what motivates people to save.
At the moment tax incentives are used as a way to encourage people to save but AEGON says that this is too complicated and does not appeal to the majority of savers.
Francis McGee, head of corporate affairsc at AEGON, said: "We have a long and welcome tradition in this country of using the tax system to encourage saving, especially for the long term. But the efficiency and effectiveness of tax breaks has come under increasing scrutiny, and policymakers have undermined them by constantly tweaking the system.
“This project aims to design a better system of tax incentives, ones that are more likely to work because they are designed with economic and behavioral principles to the fore.
"The Government says it is committed to re-invigorating a savings culture so let's take this opportunity to look at what actually motivates people to save, the levers available to government to drive such behavior and the consequences for public and personal finances. In the current economic climate we need to make sure we get the best value for money for the taxpayer."
Their proposals suggest that the government should identify, scope and explore a set of alternative policies for savings incentives as well as looking at the financial impact of these alternative policies on the public purse, household finances and the long-term savings industry.
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