Industry and unions call for independent pension commission

The UK's multibillion-pound pension and insurance industries have joined forces with unions to call on the next government to put pension policy into the hands of an independent body.

As political parties set out plans for new raids on pension tax relief to fund election promises, leading figures representing savers and providers warn of the risks of constant tinkering with pension policy.

In a letter published in the Financial Times on Thursday, the National Association of Pension Funds, the Association of British Insurers and the Trades Union Congress call for an independent retirement savings commission to be established.

"We are concerned about the risks of developing policy in a piecemeal way, driven by the political cycle," said the letter signed by Joanne Segars, chief executive of the NAPF, Frances O'Grady, general secretary of the TUC, and Huw Evans, director-general of the ABI.

"The long-term interests of savers, not the short-term interests of politicians, must be at the heart of pensions policy." The signatories say it was a mistake for the Pensions Commission, a non-departmental public body set up in 2002, not to have been made permanent. The commission, established under the Blair government and led by Lord Turner, was charged with reviewing private pension and retirement savings.

Referring to a policy that signs up workers to pension schemes unless they specifically opt out, the signatories said: "[The commission] got people saving through auto-enrolment and revamped the state pension system. These huge changes have been successful and broadly accepted because the Pensions Commission understood the policy options and built consensus."

The signatories call on the next government to set up a permanent retirement savings commission to "encourage pension policy designed for the long-term".

"A standing commission would recommend clearer options and stronger solutions by providing independent, expert analysis and building crucial consensus around what to do and how to do it," they said.

The letter comes as the Institute for Fiscal Studies, an independent think-tank, this week lambasted plans by the main political parties to further cut pension tax relief.

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The measures have been estimated to have increased revenues by £5bn a year in the short term, according to the Office for Budget Responsibility.

"The frequency and direction of reforms to pension taxation under this government has been concerning," said the IFS. "The continued desire to dismantle an important and relatively sensible part of the tax system is more worrying still."

The Conservatives have proposed reducing the annual allowance for those with taxable incomes over £150,000 so that it falls from £40,000 to £10,000 by the time income reaches £210,000.

Labour plans to fund a reduction in university tuition fees by restricting tax relief on pension contributions to 20 per cent for those earning above £150,000.

A separate survey of 1,015 adults published by the NAPF on Thursday found that fewer than one in three (29 per cent) thought recent pensions policy changes had made them more confident about the future of their pension savings.

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