This week’s Budget contained little in the way of surprises for the employee benefits market.
But, in among the flood of press releases that we inevitably receive after such events, I spotted a couple which presented the government’s new Help to Buy Isa as an opportunity for employers.
These suggested that employers could include this new type of Isa in their remuneration packages and facilitate employer and employee payments into the account in place of pension contributions.
I don’t doubt that it is a great opportunity. Given how difficult it can be to save for a house deposit these days, I’m all for anything that helps staff to save and achieve these goals. And I certainly agree with anything that gets staff thinking about, and planning for, their short-, medium- and long-term savings needs.
But I’d question whether taking away from their retirement provision to do so is really the right way to go about it.
If employees redirect savings away from their pension, will they then be able to catch up and sufficiently replenish their pension fund at a later stage?
And, once they’ve reaped the advantages of their savings in the short term, is there the danger that individuals will be tempted to divert savings away from their retirement funds to put towards things like paying for a wedding or childrens’ school fees?
Going through life, there are always going to be occasions when we’d all like a little more money to put towards big purchases. The challenge for employers and the employee benefits industry is how they can help staff to best build a network of savings products that enable them to prepare for all eventualities.