PLSA pension proposals for next government
08 November 2019
The Pensions and Lifetime Savings Association (PLSA) has provided four crucial steps that it states would build the strength of workplace pensions in the UK.
The Pensions Manifesto published online emphasizes how important it is for individuals to save for their futures so that they can settle comfortably into retirement. The document acknowledges that more workers are investing into pensions than ever before and that there is more flexibility for people in terms of how they choose to use their savings. But it also warns that there are further improvements that must be made by the next government to prepare for the uncertainties that the future may bring.
Four main recommendations have been made:
- The first point concerns adequate contributions and states that the current rate of eight percent is not enough to ensure a good quality of life for workers when they retire. The suggestion is that this rate is uplifted to 12%, - six percent contributed by employee and the additional 6% by employer. The recommendation is that this should be in place by 2030. Further suggestions are that the Lower Earnings Limit (LEL) for auto-enrolment should be removed and any funding relating to tackling social care should not be supplied by pension funds.
- The second point discusses effective engagement. This means ensuring that savers have access to all figures from multiple pension pots in one consolidated area, alongside state pension figures on pension dashboards. The dashboards should be non-commercial and protect sensitive consumer data. The PLSA’s Retirement Living Standards should be included to give savers an insight into the lifestyles they can expect to afford in retirement.
- Point number three addresses the requirement for pension schemes to be managed properly. This involves ensuring that they are run effectively and to provide The Pensions Regulator (TPR) with greater powers to intercept and impose fines on any reckless behaviour that risks money invested by savers.
- The fourth and final point relates to pensions and scale. Private sector defined benefit schemes are currently in deficit, despite receiving £400 billion in contributions over a ten-year period. The creation of Superfunds would help to protect member benefits.
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