Nigel Peaple, Director of Policy and Advocacy, PLSA, said: “We agree with the PPI that the UK should establish a national consensus on what is meant by an adequate income in retirement. We believe this consensus is needed so as to guide the level of automatic-enrolment contributions, the value of the State Pension, and the fiscal support for additional pension saving.
“In the PLSA’s 2016 report on Retirement Income Adequacy, we showed that if the level of automatic-enrolment contributions is not raised, only about half of people eligible for workplace pensions will achieve the 2005 Pension Commission’s target retirement income replacement rates – and only 3% if, as typical today, people have defined contribution, rather than defined benefit, pension savings.
“In light of these findings we have argued that the level of automatic enrolment contributions should be increased from today’s under 8% up to 12% by 2030 – split 50/50 between employer and employee, that the State Pension Triple Lock should be retained, and that the current level of fiscal support for pension saving should be maintained.
“In addition, as highlighted in the PPI report, two years ago the PLSA, on the basis of independent research by specialists in this area at Loughborough University, set out three Retirement Living Standards – Minimum, Moderate, and Comfortable – to support people in understanding how much different lifestyles cost in retirement so as to help people identify their own definition of pension “adequacy”.
Today over 50 organisations, in particular pension funds and advisory firms, are making use of the Retirement Living Standards, and we estimate that around 14 million people already are receiving information on them in their annual pension benefit statements and on-line tools.
“To encourage higher levels of pension adequacy, for over 10 years now, the PLSA’s Pension Quality Mark has celebrated good workplace pensions, with awards going to schemes with contributions between 10% and 15%.”
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