Next govt urged to take cross-party approach to pensions

The next government should take a cross-party approach to pensions by establishing a cross-party working group to enable savers "to plan for retirement with greater certainty”, RSM UK has said.

Ahead of the general election, RSM UK head of pensions, Ian Bell, said that while saving for retirement is a “long game”, the current approach, where pensions policy depends on who is in government, encourages short-termism.

Bell used auto-enrolment (AE) as an example of what can be achieved when all parties work together to address pension issues.

However, he argued that whilst AE has been successful in ensuring the majority of workers save into a pension, "it doesn’t go far enough in terms of the amount saved".

“The current approach of automatically saving 8 per cent of salary lulls workers into a false sense of security and means they often don’t stop to consider how much they should really be saving,” Bell added.

“Many are unaware that the 8 per cent of salary saved into pensions under AE is unlikely to be enough to guarantee a comfortable retirement.”

However, Bell noted that although raising the 8 per cent AE amount has already been acknowledged as necessary, no parties are addressing it directly in their manifestos as it is “unlikely to prove a vote winner, particularly in the current economic climate”.

Bell stated: “The current approach fails to recognise that we have a slow burning crisis building that will come back to haunt retirees and governments in years to come, unless all-party action is taken to resolve it.”

In addition to this, Bell encouraged the next government to commit to improving financial literacy for younger generations, to ensure they understand that saving for retirement is not just an “older person’s issue”.



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