David Brooks, Head of Policy at leading independent consultancy Broadstone, commented:
“The Pensions Commission’s findings are a stark reminder of the UK’s pension savings challenges, which are particularly acute for lower earners and the self-employed. Too many people are either saving too little or not saving at all which will create a significant financial issue at retirement.
“However, the Interim Report also bucks the trend of received wisdom around the success of auto-enrolment and the benefits of pension freedoms. Millions of people are still sitting outside of the confines of auto enrolment, even those who are in a job, while many of those who are saving are not contributing adequately.
“There are concerning findings around how quickly people are rushing to access their pension and the proportion who are fully encashing their pot, leaving them vulnerable to running out of money later on in retirement.
“The Report suggests that there is significantly more work to be done across the pensions industry to provide innovative solutions for millions of people – especially lower earners and the self-employed – to bring them into the system and begin to support their pension saving journey.
“While increasing minimum automatic enrolment contribution rates will inevitably form part of the debate, this is unlikely to be a panacea given the current budgetary pressures facing many households. Encouragingly, there is already a broad package of reforms that have just been passed into Law which aim to deliver better value for money for pension savers as well as improving awareness, engagement and outcomes.”
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