Over half (56 per cent) of pension scheme representatives view new tax incentives as the best way for the government to drive pension investment through UK growth, following the two-stage pension review announced by the government on 20 July, XPS Group has found.

The poll, taken during an XPS webinar, found that nearly a third (30 per cent) of pension scheme representatives think the government must improve the attractiveness of the UK investment market first to drive increased investment.

Additionally, 39 per cent said they believe that mandating higher contributions is key to the government improving retirement security.

The results also revealed that 23 per cent supported incentivising sidecar, or short-term savings alongside pensions, to enhance retirement security.

XPS Group head of defined contribution (DC) advisory, Sophia Singleton, said that while the government’s review of DC investment in UK growth was “welcome”, policymakers must recognise the strengths of existing investment strategies.

“To invest more of DC savings in the UK, clear incentives and new opportunities will be needed,” Singleton continued.

“The second stage of the review will also be crucial. Improving the adequacy of savings not only bolsters retirement security but can also drive more pension investment in the UK economy.”

XPS Group partner, Wayne Segers, noted that there is only a “passing” mention of private defined benefit (DB) pensions in the pension review.

Segers added: “It is unlikely that trustees and employers of DB schemes will be persuaded by any government to add significant investment risk given the hard-fought security achieved over the last 20 years.

“And the level of members’ benefits in DB does not directly depend on investment returns.

“Rather, the government should progress changes to surplus rules, ideally as part of the announced Pension Schemes Bill.

“Previous XPS analysis showed that safely generating surplus can create £100bn of value for members and employers that in turn can help our economy.”

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