Pension experts propose changes to benefit low-income savers

Pension experts are proposing changes to help low-income savers benefit from pension contributions. These suggestions come ahead of a key spring statement from Chancellor Rachel Reeves on March 26, 2025. Lisa Picardo, a pension expert from PensionBee, has put forward five specific changes aimed at supporting younger and lower-income workers. One of the main proposals is to lower the Auto-Enrolment age from 22 to 18. She also wants to remove the minimum earnings requirement of £6,240. Picardo believes these changes will give more workers access to pension savings from the start of their careers. Picardo emphasizes that starting to save early can lead to significant growth over time. She argues that raising the minimum contribution level for Auto-Enrolment pensions is crucial. The current 8% contribution is inadequate for many people to maintain a decent living standard in retirement, especially given increasing life expectancy. In addition to these changes, Picardo highlights the need for a fairer tax relief system. She notes that higher earners currently enjoy up to 45% tax relief on their pension contributions, while basic rate taxpayers receive just 20%. She proposes a flat tax relief rate of 30% to better support low-income savers. Furthermore, Picardo suggests implementing a 10-day deadline for pension transfers. This would prevent savers from having to wait months to move their funds. Lastly, she urges the Chancellor to confirm that there will not be changes to the tax-free allowance for pension withdrawals. Reassurance on this issue is vital for savers who want stability for their future planning.