Many Brits are not saving enough for their futures and are risking financial hardship when they come to retire, Fidelity International has claimed.
With the election campaigning now underway, Fidelity has issued a savings manifesto challenging the political parties to commit to encouraging people to save for their futures.
In its manifesto, Fidelity is calling for a number of incentives to bridge the 'savings gap' as it suggests that in the future it will be increasingly unlikely that the state will be able to sufficiently fund retirement of every tax payer.
A key incentive that the investment provider is keen for the parties to consider is formally encouraging the ISA transfer of savings into pension savings, which it claims would give people a "financial incentive" to transfer their accumulated ‘unlocked’ savings into a ‘locked’ pension pot.
In addition, Fidelity believes that this type of transfer could also apply to the Child Trust Fund, enabling children to transfer their funds into ISAs, which it hopes would encourage a young generation of savers who traditionally "shy away from saving".
Meanwhile, it also wants to build on the success of ISAs by introducing an annual bonus that is paid on the anniversary of the investment to act as a further incentive to savers and discourage them from raiding their savings.
Although welcoming the government's plan to introduce auto-enrolment into employer pension schemes, Fidelity is calling on the new government to create greater flexibility in the pension system by allowing early access to pension funds for certain defined events, such as long-term unemployment or serious illness.
Commenting, Fidelity says the current system does not encourage people to save: "Nearly all today’s support is given to pension planning, which is inaccessible until retirement. For an average saver, this represents a serious disincentive. Savings are locked away and unavailable as a buffer against unpredictable but probable financial needs.
"It is recognised that the primary focus of incentives must be on longer-term retirement provision, but the current structure does little to incentivise a more gradual or transitional approach to retirement, which would allow savers to balance the possible need to access money with a commitment to their eventual retirement."
© Fair Investment Company Ltd