Pension Commission: “The ‘right, long term answer’

Pension Commission: “The ‘right, long term answer’ will include pushing people from an 8% saving rate to at least 12%.”

Paul Leandro, Partner at Barnett Waddingham (BW) shares his analysis on the ‘right, long term answer’ to the UK’s retirement savings crisis.

Paul Leandro, Partner at Barnett Waddingham, comments: “The Government has – finally – announced its laser focus on the ticking timebomb that is the UK’s retirement savings crisis. The revived Pension Commission certainly has its work cut out.

“The ambition to explore the barriers stopping people from saving enough for retirement is needed, but work on this already done by the industry needs to be recognised.  A final report in 2027 means at least another two year delay before solutions will be implemented – which pushes the timebomb closer to detonation. And while the Pensions Minister’s commitment not to increase pension contributions in this parliament will surely prompt a sigh of relief from employers who are still grappling with the NI hike, the ‘right, long term answer’ will indeed include pushing people from an 8% saving rate to at least 12%. In all likelihood, the responsibility for that will need to be split between employee and employer.

“Good news comes in the explicit statement of intent to tackle the gender pensions gap, as well as low savings rates in the Pakistani and Bangladeshi communities. Two other groups who should not be overlooked are renters – as a quarter of 55+ workers are still renting*, which massively impacts their chances of a comfortable retirement – and the disabled community, who are under-employed and grappling with higher short- and long-term costs.”

*The At Retirement Reckoning