The industry needs to think quite “holistically” about adequacy and how it wants to address this going forward, Pensions Policy Institute (PPI) director, Chris Curry has said.

Speaking at the PLSA Annual Conference 2024, Curry said: “Adequacy is not just one single thing, it means different things to different people at different times.

“One of the challenges with adequacy is not just about pensions and not just about pension saving, or cost. It’s about all other forms of incomes and assets.”

Curry explained that the three-fold increase likely to be seen of people in the private rented sector in retirement, will make a “massive impact” on the living standards of those people if there is not a “significant change” in the system or in housing.

“You can’t deal with it all through the pension system either, we need to be thinking about much wider policy measures, in order to think about how we are likely to impact adequacy in the future,” he stated.

This was echoed by Nest Insight executive director, Will Sandbrook, who suggested that people's circumstances are different in working age and in retirement and making “blanket” public policy decisions has some challenges.

“The level of income you might need to take you through a smooth consumption pattern from working age to retirement will look drastically different for different people who are otherwise on the same income, that might have all sort of different commitments in terms of dependants and household structure,” Sandbrook said.

Furthermore, he suggested it was “important” to distinguish between low retirement income and low lifetime income.

“How plausible is it that you should be saving more today and moving further away from a basket of goods-based measure of an adequate income in your current life, potentially making quite complex spending sacrifices, in order to get further ahead of a benchmark when you retire,” Sandbrook said.

“There is a fundamental question for anybody who is earning not as much as that similarly constructed objective benchmark standard for living standards today.

“It is not totally clear about how much additional consumption they should be sacrificing today for more consumption in the future, because fundamentally what they have in insufficient income, not insufficient retirement income.”

Following the election in July, the Labour government included a Pensions Schemes Bill in the King's Speech just one week after the election and launched a pensions review within the first month, which promised a review of adequacy in its second phase.

Speaking earlier at the conference on adequacy, Minister for Pensions, Emma Reynolds, said: “We need consider what we need to do to boost people’s retirement outcomes to ensure that they can see what they’re investing in and see how that’s playing out for them.

“I certainly do think we need to look at contribution levels, we need to look at auto-enrolment, we need to look at some of the groups that have been traditionally underprovided for whether that is women or ethnic minority groups or indeed the self-employed.

“Those are the things that are absolutely at the forefront of phase two of the review.”

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