Nearly nine in 10 (88 per cent) high net worth individuals (HNWI) do not think pension policy is working as it should to encourage retirement saving and would like to see reforms, research from Saltus has found.

As reported by our sister publication Pensions Age, the most popular single reform amongst HNWIs was addressing the issue of lost and loss-making pension pots.

Furthermore, the majority (57 per cent) would like to see reforms to pension limits, such as the annual allowance, lifetime allowance, or tax-free lump sum.

Almost a fifth (18 per cent) wanted an increase in the annual allowance, 17 per cent wanted the level of tax-free cash withdrawal when accessing pensions to rise, and 9 per cent called for the removal of the tapering of the annual allowance as earnings increase.

Meanwhile, 13 per cent wanted to be able to access all inherited pensions tax free.

When asked what the useful change to pensions would be, nearly one in five (19 per cent) respondents supported the creation of a ‘pot for life’ model, which was first proposed last year by the previous government.

More than one in 10 (12 per cent) wanted a minimum pension transfer time to be introduced, while 12 per cent had no desire for pension policy changes.

Commenting on the findings, Saltus partner, Gianpaolo Mantini, said that the data reflected the sentiment amongst HNWIs who are seeking reforms that simplify the pension system and provide a clearer path to retirement planning.

“Our clients believe in the UK and want to put their savings to work on behalf of the country and believe that a few simple reforms could significantly contribute to this goal,” Mantini continued.

“A ‘pension pot for life’ is the most popular single change they’d like to see alongside easier and quicker pension consolidation, so the new Labour government’s promise that would tackle these issues will prove popular with HNWIs.

“This could be improved further if employees could also insist on employers paying into newly established pensions (such as SIPPs) in addition to existing workplace schemes, some of which are limited in their ability to provide for flexible drawdown or offer poor investment solutions.

“Overall, changes to the tax thresholds are what HNWIs would most like to see. However, with no mention of either the lifetime allowance or the tax-free lump sum in the Pension Schemes Bill, it is unlikely we’ll see any changes, and if we did, it is more likely to be a cut than an increase.”

However, while Mantini expressed doubt that the Chancellor, Rachel Reeves, would cut the 25 per cent tax-free lump sum, he noted that she may look at the lifetime limit.

“It is currently 25 per cent to a maximum of £268,275 – which may sound like an oddly precise figure, but it is in fact just 25 per cent of the (now-abolished) lifetime allowance of £1,073,100,” Mantini explained.

“It is possible, therefore, that the new Chancellor may decide to freeze or reduce this limit in the future – which would, over time, start to have an impact on the pension pot ‘freedoms’ of all retirees, not just HNWIs.”

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