The Pensions and Lifetime Savings Association (PLSA) has unveiled a retirement living standards tool to help members engage with their pension and set retirement targets.
Launched at its annual conference in Manchester today (17 October), the standards are aimed at helping people to "picture their future retirement", what that might cost, and give them more confidence about their retirement savings, the trade body has said.
The standards were designed to fill the gaps in current approaches to member engagement and act as a practical and meaningful starting point on a saver's engagement journey. They are pitched at three levels: minimum, moderate and comfortable.
The PLSA said it will seek to ensure the pensions sector and the government adopt the standards to help more people plan effectively for retirement. It is also working with the Money and Pensions Service (MAPS) to include the standards in their tools, such as the Money Advice Service pension calculator.
Pensions and financial inclusion minister Guy Opperman said: "We have transformed saving for retirement for millions of people and the next challenge is to make it easier for them to engage more with their pensions.
"It's great to see what the PLSA has developed which has the potential to help savers think about the future and plan for the retirement they want."
The PLSA's ambition is for the standards to become widely adopted across the industry, and wants to see schemes representing 90% of active savers adopting the standards by 2025.
Director of policy and research Nigel Peaple said the standards "distil robust, in-depth research with the public into an easy to understand basket of goods that helps people picture the future - and relatable figures that can provide a powerful and practical tool for encouraging engagement with saving".
As well as helping savers understand what their retirement will look like, the PLSA believes the standards will help the pensions industry by bringing a set of robust standards - based on independent research with the UK public - for use across scheme communications and tools. The PLSA also hope they will equip schemes to further encourage savers to engage with their pension, giving them concrete information about costs in retirement that leads to more confidence in planning to achieve their aspirations.
MAPS senior policy and propositions manager Jackie Spencer said: "Saving for something is easier to do when you can visualise what you're working towards, which is why people are often more motivated to save for short-term goals like holidays and new cars than they are for their retirement.
"The new retirement living standards are a great way of offering savers some practical examples of what they can expect from their lives when they stop working.
"MAPS has agreed to be an early adopter of the new standards and will be looking to incorporate them into pension guidance and our online pension calculator."
The PLSA's work builds on its Hitting the Target report published last year, in which it proposed a number of reforms to boost pensions adequacy, including retirement income targets to show the lifestyle people could afford on different levels of income.
How the retirement living standards work
The retirement living standards describes three different standards of living with a "basket of goods" and associated costs for each - all established by what the public considers realistic and relevant expectations. The basket of goods is made up of household bills, food and drink, transport, holidays and leisure, clothing and personal and helping others.
For example, some schemes will use them in general information for their members, in annual benefit statements, or to develop personalised targets for their members' pension planning.
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