Expert insight ahead of pensions review: addressing the adequacy challenge

Today, the Department for Work and Pensions (DWP) announced that it will be publishing three key reports on Monday: Analysis of Automatic Enrolment Saving Levels, Analysis of Future Pension Incomes 2025, and The Gender Pensions Gap in Private Pensions.

Ahead of the expected launch of the Pensions Review on adequacy, Damon Hopkins, Head of DC Workplace Savings at leading independent consultancy Broadstone has commented:

“The launch of the long-awaited review on pension adequacy will mark a critical inflection point in the nation’s retirement finances. Hiking contributions is undoubtedly the fastest way to tangibly increasing savers’ pension pots so they can enjoy a good standard of living in retirement and is likely to feature prominently in review.

We face a huge retirement adequacy problem with profound social impacts following the OBR’s recent warning that low pension savings could lead to a greater reliance on the Government to support pensioners via a benefits system which is already unaffordable. Understanding the role of the State Pension and closing the pensions gender gap should also be an important focus of the review.

While reforms should ultimately bolster the long-term financial security of workers, the Government will need to be wary of the financial burden on employers. Given the recent increases in National Insurance contributions and National Minimum and Living Wage rates, employers will need to start considering how they manage potential increased pension cost across the medium-long term.”