On the go: The Pensions and Lifetime Savings Association has called for an increase in employer contributions and an extension of auto-enrolment over the next decade, as part of a submission to the Work and Pensions Select Committee.
The select committee’s call for evidence on saving for later life ended on February 2. It requested submissions on whether UK households had sufficient retirement savings and what advice and guidance savers needed for retirement.
It also sought insights on what the government should be doing to support the self-employed as they save for retirement, and what the government can do to close the gender pensions payback.
In the aftermath of the government publishing its own white paper on levelling up the nation, the PLSA adopted the same moniker for its appeal to boost workplace pensions.
It suggested that by the end of the decade, employer contributions should match those of their employees so that each would pay in 5 per cent of salary.
This would avoid imposing higher contributions on employees, but it would ask employers to increase their contributions to 5 per cent from 3 per cent. This, in turn, would lift overall pension contributions to 10 per cent from 8 per cent.
The PLSA wants employers and employees to do more over the next decade, suggesting that both increase their contributions by a further 1 per cent — taking total auto-enrolment contributions to 12 per cent.
It also said auto-enrolment should be extended during the middle of this decade to include younger people and pension saving from the first pound of earnings, in a legislative move that should proceed “as soon as possible”.
“As the government seeks to ‘level up’ the economy, narrowing wealth disparities between regions and different demographics, we think now is the right time for the government to commit to levelling up pensions, gradually, over the next decade” Nigel Peaple, the PLSA’s director of policy and advocacy said.
“Current contribution levels are not likely to give people the level of retirement income they expect,” he continued.
“A government timetable now, as part of the levelling up strategy, for modest increases over the next decade, will ensure pension savers are not overlooked or undervalued.”
