In July the government revived the Pensions Commission, to address the UK’s retirement crisis that risks tomorrow’s pensioners being poorer than today’s. To highlight the scale of the problem, research from the Department for Work and Pensions indicates 15 million people are not saving enough for their retirement.
In response, the Society of Pension Professionals (SPP) has published a wide-ranging paper, “Saving Retirement: who is at risk and why?”, which sets out what issues it believes the Pensions Commission should tackle.
This includes defining “adequate”; identifying the under pensioned; better understanding the trade-off between adequate living and adequate saving; and improving public trust in and awareness of state provision.
The “Saving Retirement” paper explores how disenfranchised groups could be better supported, recommending the extension of Automatic Enrolment (or something similar) to the self-employed; that the Commission explore the practicalities of introducing a carer’s credit to help the 2.3m people working as carers who currently receive no income and therefore cannot make any pension contributions; and increasing the £2,880 limit on which pension tax relief is payable for non-taxpayers.
In relation to Automatic Enrolment contributions, the paper states, “The Commission should set out a long-term plan for increasing auto-enrolment contribution rates, including a clear framework and timetable, which provides certainty for savers and employers alike, to reach an adequate level of contributions.”
The paper goes on to encourage the Commission to look beyond pensions to explore how wider lifetime saving could be improved through the integration of short term and long-term savings schemes, through alternative architecture such as expanding the list of authorised benefits provided by pension schemes (e.g. long-term care and medical support for critical illness) as well as promoting the delivery of CDC pension schemes.
Sophia Singleton, SPP President, said;
“The SPP hopes that this wide-ranging paper proves useful in stimulating debate, thought and most importantly, action, on what is arguably the biggest pensions challenge faced to date. As the paper makes clear, Government, industry and savers can all do more, and we all need to if we are to achieve the shared goal of an adequate retirement income for all.”
