In the Pensions and Lifetime Savings Association's (PLSA's) regular column for Professional Pensions, the trade body’s director of policy and advocacy explains why it is leading calls for all political parties to commit to pension reform in their forthcoming general election manifestos.
In the current landscape where financial security in retirement remains a pressing concern for many, the call for comprehensive pension reforms has never been more urgent.
Reshaping the UK pension system will translate into significant benefits for millions of workers and especially for traditionally under-pensioned cohorts: the self-employed, gig economy workers, multiple job holders, low earners, women, and ethnic minority groups.
The PLSA stands with 11 other organisations[i] as founding signatories to a new Building a Consensus for Better Pensions charter, which showcases collective advocacy for comprehensive reforms aimed at sculpting a pension savings system that is adequate, fair, and affordable for all individuals across the UK.
Representing a diverse group of voices across the pensions industry, along with employer and consumer representative groups, the organisations are lobbying for the following positive pension changes:
- Setting clear objectives for the UK pension system: taken together, state, workplace and personal pensions, should be adequate, fair and affordable.
- A universal state pension that protects everyone from poverty and covers all basic needs as it plays an essential role in the pension provision of most citizens, so its current value should be at least maintained.
- Retirement saving which benefits as many people as possible, in particular, traditional under pensioned groups including: the self-employed, gig economy workers, multiple job holders, low earners, women, and ethnic minority groups.
- Improving outcomes to ensure that pensions provide a decent standard of living throughout retirement.
It's been almost 20 years since the Pensions Commission proposed reforms to the UK pension system. Despite the expansion of eligibility for the state pension and increased numbers of people saving for retirement in the workplace, a substantial segment of the population still falls short of securing an adequate, fair and affordable retirement income.
Together, we are calling for all political parties to commit to pension reform in their forthcoming general election manifestos. Our collective aim is to ensure pensions are high on the agenda and for every individual in the UK to avoid poverty in retirement and have a secure financial future.
Our recent survey of savers also showed resounding support for the recommended reforms, with over 85% of respondents advocating for workplace pensions to provide adequate retirement incomes. Moreover, an overwhelming majority, 87% and 88% respectively, emphasised the principles of fairness and affordability for savers.
A predominant concern voiced by survey participants is the insufficiency of the current state pension. More than half (56%) of employees responding believe that a full state pension of £10,600 will not provide enough income to enable them to avoid poverty in retirement. With this in mind, 72% of those surveyed agree the state pension should increase in line with the triple lock and 78% agree it should increase so pensioners do not see their living standards fall.
When it comes to auto-enrolment, the survey underscores a prevailing sentiment for gradually escalating contribution levels. More than half (53%) agree contribution levels should rise gradually over the next decade from 8% to 12%, with 21% of respondents unsure (neither agreeing nor disagreeing). Around half (46%) agree employers and employees should make equal pension contributions, while 42% believe the employer should contribute more.
The Building a Consensus for Better Pensions charter has many elements in common with the PLSA's Five Steps to Better Pensions, a project we worked on over the last 18 months.
The UK employee sentiment, established through our survey, serves as a testament to the urgent need and widespread support for extensive pension reforms.
In essence, the charter outlines a collaborative roadmap towards a fairer and more sustainable pension system, ensuring financial security for all individuals and charting a course for a better retirement across the UK which avoids poverty.
Nigel Peaple is director of policy and advocacy at the Pensions and Lifetime Savings Association
[i] The signatories to the Building a Consensus for Better Pensions charter are: The Association of British Insurers (ABI), Association of Consulting Actuaries (ACA), Age UK, Association of Professional Pension Trustees (APPT), Chartered Institute of Personnel and Development (CIPD), Chartered Institute of Payroll Professionals (CIPP), LCP, the Pensions Administration Standards Association (PASA), the Pensions and Lifetime Savings Association (PLSA), Pensions Management Institute(PMI), the People's Partnership, provider of the People's Pension and The Investing and Saving Alliance (TISA).