03/03/2023 | Press release | Distributed by Public on 03/03/2023 12:20
Tom Selby, head of retirement policy at AJ Bell, comments:
"The time has come for politicians and the pensions industry to stop patting themselves on the back about the success of automatic enrolment and start tackling the real challenge of pensions adequacy.
"The grim reality is that only half of Brits will enjoy a 'moderate' standard of living in retirement on current projections, while those saving enough for a 'comfortable' retirement will be a slim minority of the population.
"With living costs surging for millions of households, now is not the time to hike people's auto-enrolment pension contributions. But that does not mean policymakers should not set out a long-term trajectory to get people saving more.
"There are various interesting ideas out there, including 'save more tomorrow', where contributions rise automatically in line with pay increases, and exploring ways to link contribution rises to certain life events. But the longer we delay addressing this pensions adequacy challenge, the bigger it becomes.
"This must include assessing how those excluded from auto-enrolment, including millions of self-employed workers, can be brought into the pensions system. Failure to do this will risk creating a two-tier retirement system, with the self-employed left relying on the state pension and not much else in their later years.
"Today's analysis also gives valuable context to the debate around retirement savings incentives. The focus must remain on encouraging people to save more for the future, rather than hacking back pension tax relief at every opportunity."
*Based on the PLSA's 'Retirement Living Standards': Home - PLSA - Retirement Living StandardsTom Selby is a multi-award-winning former financial journalist, specialising in pensions and retirement issues. He spent almost six years at a leading adviser trade magazine, initially as Pensions Reporter before becoming Head of News in 2014. Tom joined AJ Bell as Senior Analyst in April 2016. He has a degree in Economics from Newcastle University.
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