Pensions Expert is going through a remarkable resurgence under the editorship of Maria Espadinha Deputy Editor Alex Janiaud and Senior Reporter Ben Mercer.
Add to that line-up FT intern Calum Kapoor who is publishing articles that he’s researching that don’t just parrot press releases. I include the text of an excellent article in last week’s Pension Expert. If you don’t have Calum on your list of press contacts – put him there firstname.lastname@example.org .
Some savers’ pension contributions will need to sit at slightly more than double the current minimum automatic enrolment threshold in order for them to have a “living pension”, according to new research.
The Living Wage Foundation report covered workers who are either not saving towards a workplace pension or who are saving through a defined contribution scheme.
The research included workers who had previously contributed to a defined benefit pension but who are now paying into a DC pension, but not those who are currently paying into a DB scheme.
The LWF is developing a benchmark rate of pension contributions that it believes is needed for savers to afford “an acceptable standard of living in retirement”.
It has called this the “living pension” and is considering two benchmarks for the concept.
A “whole career benchmark” would capture those who have been paying into a pension for their whole career and would need their contributions, including those of their employer, to sit at 11.2 per cent of their wage in total in order to have a living pension.
Savers would therefore have to see an increase of 3.2 per cent above the 8 per cent minimum auto-enrolment threshold.
It is also considering an “all age” benchmark, which refers to the average rate that would apply if all workers started saving at their current age, observing that savers and their employers would together have to contribute a total of 16.1 per cent. This represents just over double the minimum contribution for auto-enrolment.
Outside of those saving into a DB pension, more than four-fifths of workers did not meet any of the living pension benchmarks in 2020, the report said.
The report laid bare the contrast in pension saving between different pay brackets. In 2020, 86 per cent of those in the top weekly pay quintile were saving towards a pension, compared with just 27 per cent of workers in the bottom weekly pay quintile.
The research also revealed gaps in pension savings between sectors. The hospitality sector had the lowest proportion of savers at 39 per cent compared with the finance industry, 91 per cent of whom were saving into a pension.
The gap between the proportion of men and women saving into pensions has widened over the past decade, rising from 8 per cent in 2011 to 10 per cent in 2020. Seventy-one per cent of male workers were pension savers in 2020, compared with 61 per cent of female workers.
LWF director Katherine Chapman said:
“The current cost of living crisis has hit low-paid workers hardest, and many are not only struggling to keep their heads above water today, but also worrying about an uncertain future.
“Sixteen million people are not saving at levels which are likely to prevent poverty beyond their working lives,”
“Today’s cost of living crisis risks becoming tomorrow’s pensions crisis.”
Credit where it’s due
Well done Maria , for building this great young team. I hope that Calum will become a permanent feature of my reading. Well done to the FT for promoting this title and raising the bar for pension journalism elsewhere.
It’s good to see, it is appreciated.
Henry – one of the most important banners you’ve ever used. The lack of age diversification on UK pension policy and regulation has had a significant detrimental impact causing the failure of the once lauded UK pension system, particularly contributing to the demise of DB (and by failure I mean a pension and savings system that has coerced the sell-off of growth and return producing assets in exchange for Govt debt (ie future taxation) – in effect a clever and insidious back-door confiscation and nationalisation of hitherto private pension provision). Older people (ie us, the post-middle aged and the baby boomers, the Political and Regulatory Classes) generally yearn for certainty as we age, anticipating our diminishing capabilities, and that mindset has pervasively created a system to protect our pensions at the expense of similar for the younger, and has placed the burden of paying those pensions onto the next generation through the aforementioned future taxation. Its illusionary – history shows that the youth will not accept or fund such wealth disparity whether represented by privilege or age induced income differentials. The younger would, if they understood any of it, choose a system that encouraged pension savings into the economy, into investment and growth, and that was the original basis of tax relief – to encourage that. Here’s hoping the younger more diverse contributions at Pension Expert can raise awareness on the real reasons behind the growing pension disparities.