Investment platform provider Tillit is the latest company to call for the government ro raise minimum AE contributions to avoid a “looming retirement crisis”.
The company points out that forthcoming pension reforms in the UK have been modelled on the Australian system — with a drive towards fewer, larger schemes, with the capability to invest in productive finance and private assets.
However it points out that in Australia employers are required to contribute a minimum of 11.5 per cent of workers’ salaries into a pension. In contrast the minimum contribution rate in the UK is 8 per cent, with only 3 per cent coming from the employer.
It adds that currently over 80 per cent of households are falling short of a comfortable retirement. According to Tillit increasing contributions is essential to tackle this crisis.
Tillit now offers a workplace solution, and is the first UK pension provider to offer auto-escalation by default in their pension product. This feature allows members to gradually increase their contributions over time and is based on the successful ‘Save More Tomorrow’ that has been pioneered in the US and used there for over a decade.
Tillit founder and CEO, Felicia Hjertman says: “It’s deeply frustrating to see the Government’s continued inaction on raising the minimum level for employer pension contributions.
“Current contribution rates fall far short of what’s necessary to ensure a comfortable retirement, something which the government was warned about by the Pension Commission in the Lord Turner report over a decade ago.
“At Tillit, our number one priority is to help people take control of their financial future, and that is why we have launched auto-escalation as a core feature of the Tillit Pension. The Government should take note to avoid a pensions timebomb.”
