Significant number of individuals facing 'retirement income shortfall'
28 Nov 2016
More than half of the 25.5 million individuals in employment in the UK are at risk of not having a satisfactory income in old age, the Pensions and Lifetime Savings Association (PLSA) has suggested.
A report by the pension industry body defined an ‘adequate retirement income’ as one that reaches the ‘target replacement rate’ – 67% of the amount earned before retirement.
Some 13.6 million workers are at risk of not achieving this rate, according to the PLSA.
The report also revealed that 1.6 million people are at ‘high risk’ of not meeting the minimum income standard of £9,500 set by the Joseph Rowntree Foundation.
However, the analysis suggests that auto-enrolment will leave individuals an estimated £2,500 per year better off in retirement.
Graham Vidler, Director of External Affairs at the PLSA, commented: ‘Automatic enrolment is set to deliver a tangible improvement in the retirement incomes of millions of people, but there is still work to do.
‘It is clear from our analysis that minimum contributions under automatic enrolment need to increase to at least 12%.’
Meanwhile, Frances O’Grady, General Secretary of the Trades Union Congress, stated: ‘Employers must step up and show they’re prepared to put more into workplace pensions alongside their employees. And the government must improve auto-enrolment so it delivers a decent pension for everyone.’