The next government has been urged to conduct a holistic review of pensions adequacy, covering both private and state pensions, with particular calls for the incoming government to look to increase auto-enrolment minimum contributions.

In an open letter, several businesses, employers, trade bodies, and charities called on the political parties to commit to addressing pensions adequacy in the UK, arguing that inaction could lead to a strain on social support systems and the potential increase in retirement poverty.

The letter explained that whilst automatic enrolment has “undeniably been a major success” in increasing people’s retirement savings, “millions” are still not expected to have a comfortable retirement income.

“Lacklustre real wage growth, combined with the current minimum automatic enrolment contribution rate of 8 per cent is not enough to meet many people’s future retirement income needs,” it stated.

“Fourteen million defined contribution pension savers are not on track for the income they expect. The current state pension age is also scheduled to increase to 67 from 2026, which could create a further income gap.”

Given this, the letter called on the next parliament to “urgently” bridge the retirement income gap for the current and future generations, arguing that any potential solution, for example by increasing auto-enrolment contributions, must also be coupled with thorough thinking on affordability, the state pension age, and ensuring the best possible investment returns.

It also argued that acting "swiftly" could help provide a boost to the UK economy, with increased saving potentially increasing investment in the UK by up to £10bn.

The letter stated: “The strain on social support systems and the potential increase in poverty among those in retirement are issues that we can’t ignore.

“Let us not overlook the efforts of hardworking individuals who strive to save for retirement. They deserve a pensions system that evolves to support their aspirations.

“By ensuring that everyone has enough savings for a secure retirement, we stand to benefit as a country and as a society. In the spirit of securing a brighter future for all, we call on all political parties to commit to a review of pensions adequacy in the next parliament to make retirement security a reality for every UK citizen.”

The signatories to the letter were: Age UK, Capital Markets Industry Taskforce, Centre for Ageing Better, Chartered Institute for Personnel and Development, Confederation of British Industry, Demos, Independent Age, Living Wage Foundation, Phoenix Group, The Investing and Saving Alliance (TISA), and The Lang Cat.

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