PLSA proposes five steps to better pensions

12 October 2022

The Pensions and Lifetime Savings Association (PLSA) is recommending five reforms to government to assist millions of savers to achieve a higher retirement income.

Research shows, despite the high success of automatic enrolment, more than 50% of savers will fail to meet retirement income goals. There is further concern for under-pensioned groups, such as those who take time out to care for others, the self-employed and gig-economy workers.

The PLSA report “Five Steps to Better Pensions: Time for a New Consensus” is now available and makes the following recommendations for reform:

  1. National objectives: The creation of clear national objectives for the UK pension system – ‘adequate, affordable and fair’ – combined with regular formal monitoring of whether it is on track to achieve these goals.
  2. State pension: Reform of the state pension so everyone achieves the Minimum Retirement Living Standard, to prevent pensioner poverty.
  3. AE reform: Reform of AE so more people are included, such as younger people, multiple job holders and gig economy workers, and at a higher level so people on median earnings are likely to achieve the Pensions Commission’s Target Replacement Rates. These measures include saving from the first pound of earnings, and gradually increasing contributions from 8% to 12% from the mid-2020s to the early 2030s – with contributions split evenly between employers and employees).
  4. Under pensioned groups: Additional policy interventions to help under pensioned groups, including women, gig economy workers, self-employed people, and others.
  5. Industry initiatives to achieve better pensions: actions to help people engage with pensions, receive higher contributions, or get better pension outcomes.

PLSA’s calculations estimate that with the reforms a median earner would see an increase in retirement earnings from £15,000 per year to around £19,000, or about 25%. This will also help more people achieve the minimum requirements for the independently assessed Retirement Living Standards.

Information provided in this news article may be subject to change. Please make note of the date of publication to ensure that you are viewing up to date information.