The Pensions and Lifetime Savings Association (PLSA) is pushing for pension system reform with the aim of enabling a greater number of people to achieve a higher standard of living in their later years.
Next week, the State Pension in the UK will increase by 10.1 per cent, benefiting over 10 million retirees. But the new amount of £203.85 per week (£10,600 per year) falls short of the PLSA’s Minimum Retirement Living Standard (£12,800 for a single person), which is considered the minimum amount needed for a decent standard of living based on extensive research.
PLSA have proposed five key steps to improve pensions in the UK. These include establishing clear national objectives for the pension system, regular monitoring of progress towards these goals, reforming the State Pension to prevent pensioner poverty, addressing issues with Automatic Enrolment (AE) to increase participation and contributions, implementing targeted interventions for under-pensioned groups, and industry initiatives to boost engagement, contributions, and outcomes.
PLSA director of policy & advocacy Nigel Peaple says: “Making up the majority of most pensioners’ income, the State Pension is a vital pillar in guarding against poverty in retirement. The Government was right to maintain the triple lock in the face of heightened inflation. In time, the State Pension should be reformed so that it is set at a sufficient level to protect everyone – especially under-pensioned groups – from poverty.
“Alongside further State Pension reform, the PLSA is calling for a timeline to set out a gradual rise in automatic enrolment contributions, over the next decade, so that by the early 2030s, they will increase from 8 per cent to 12 per cent, and contributions are split evenly between employers and employees. We also want to see the scope of the system expanded to improve savings amongst those not already included.
“A bill has already been laid to allow a younger cohort (18-22) to qualify for AE and begin from the first pound of earnings, however, the biggest lever Government can pull to meaningfully improve the retirement outcomes of millions of savers, is to set a timeline for increasing the minimum pension contributions paid into a worker’s pension by employers.”