The Pensions and Lifetime Savings Association (PLSA) has launched a consultation on five key pension reforms, in an effort to help build a consensus as to what reforms needed to make the current UK pension system “adequate, affordable and fair”.

Launched at the PLSA Annual Conference 2022, the report outlined five key reforms designed to future proof the pension system, suggesting that if policy makers set out a roadmap now, a new framework could be implemented over the next 10 to 15 years.

And change is needed, as analysis from the PLSA found that more than 50 per cent of savers could fail to meet the retirement income targets set by the 2005 Pension Commission without reform.

Additionally, around a fifth of households are likely to achieve less income than needed to meet the minimum level of the Retirement Living Standards.

In light of this, the PLSA emphasised the importance of setting a “clear national objective” for the UK pension system to be “adequate, affordable and fair”, suggesting that the proposed reforms would help achieve this.

Indeed, analysis from the PLSA found that as a result of the reforms, a median earner, for instance, would see their pension income increase from around £15,000 a year to around £19,000, marking an almost 25 per cent increase.

The proposals include reforming the state pension so everyone achieves the minimum retirement living standard, and implementing the 2017 auto enrolment reforms, which would help push more people into pensions.

The paper also suggested that additional policy interventions could be introduced to help under pensioned groups, including women, gig economy workers, self-employed people.

However, the pensions industry also has a role to play, as the research highlighted the importance of industry initiatives that look to achieve better pensions.

PLSA chair, Emma Douglas, stated: “The PLSA’s recommendations – Five Steps to Better Pensions – will help form a new national consensus on how best to build upon a decade of automatic enrolment success so everyone can achieve the right income in retirement.

“The combined successful implementation of these recommendations could make a huge difference to the retirement income of today’s savers. An annual increase of almost £4,000, or 25 per cent for median earners, is particularly significant.

“Now, in the middle of a cost-of-living crisis, is not the time for radical change but by providing a clear ‘roadmap’ for reforms, government will give employers and pension savers time to plan, which will help to ensure better retirements.”

PLSA director policy and advocacy, Nigel Peaple, added: “Our proposals are designed to help both workers who are currently saving in a workplace pension and those who are not, such as women undertaking caring responsibilities, the self-employed and people in part-time jobs.

“Given the current cost of living crisis, we are not proposing any increases in pension contributions during the next three years and, after that point, only very gradual increases over the following decade until a point in the early 2030s when most people will contribute 12 per cent - split evenly between employers and employees.

“Our report is a consultation exercise and we hope very much to hear from all those; whether from pension, business, worker or pensioner organisations; who have an interest in ensuring everyone has a better income in retirement.”

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