The Pensions and Lifetime Savings Association (PLSA) has updated its Retirement Living Standards (RLS) to reflect people’s changing expectations for living in retirement.

They have been altered to take into account changing attitudes following the Covid-19 lockdowns over the past 18 months, as well as the increased cost of living.

The PLSA commissioned the Centre for Research in Social Policy to produce reports on the impact of Covid-19 on people’s plans for retirement and the retirement living standards in the UK in 2021, and found that many respondents felt the loss of freedom had highlighted the importance of foreign travel and financial security.

Furthermore, the pandemic had reinforced savers’ belief in the importance of having choice and opportunities.

The RLS have three tiers – minimum, moderate and comfortable, with the standards designed to help people understand what they want in retirement and what the cost could be.

The annual budget for minimum RLS has increased by £700 for a single person since they were launched in 2019, up to £10,900, and by £1,000 for a couple, to £16,700.

Much of the increase was due to rising transportation costs, which increased by 10 per cent over the two years, while the minimum tier also now includes a budget for hairdressing and a Netflix subscription.

The moderate level of RLS also increased over the same period, by £600 for a single person to £20,800 and by £1,500 for a couple to £30,600.

In the moderate tier, the eating out budget increased, alongside rises in council tax and inflation.

For a comfortable retirement, single people’s annual budget has increased by £600 to £33,600, while a couple’s budget rose by £2,000 to £49,700.

Increases seen at the moderate level were also included in the comfortable tier, while additional costs such as annual maintenance and the servicing of a burglar alarm were included for the first time.

Overall, the PLSA expected around three-quarters of single people are likely to achieve the minimum standard, while it should be achievable for all couples, around half of single people can expect to meet the moderate standards, and approximately one in six single workers should achieve a comfortable retirement level.

PLSA director of policy and advocacy, Nigel Peaple, commented: “It is important that the RLS remain relevant by reflecting real world price changes and real world expectations about lifestyles in retirement. We hope the updated standards will encourage people to think about whether they are saving enough for the retirement lifestyle they want and, in particular, whether they are making the most of the employer contributions on offer in their workplace pension.

“The lockdowns caused by the pandemic have given many workers a foretaste of being retired and made people think about the activities and experiences they truly value. The pandemic has emphasised the importance of economic security as well as social and cultural participation in retirement.

"With barbers and hairdressers closed during lockdowns and many of us taking scissors to our own hair for the first time, it is little surprise that the research groups agreed the budget for personal grooming should be increased across the three standards. The addition of Netflix also gives an insight into what many of us expect to be doing when we finish work.”

Also commenting on the changes, AJ Bell head of retirement policy, Tom Selby, said: “The pandemic has exposed gaping holes in the finances of millions of people, with many having little or nothing saved for an emergency.

“What’s more, contribution levels into pension schemes remain low, particularly among self-employed workers who don’t benefit from automatic enrolment.

“As the UK economy slowly recovers from lockdown, it is vital financial resilience becomes a key focus for policymakers, both in the short and long term.

“This must include encouraging more people to think about how they will fund their lifestyle in retirement, with pensions likely to be central for most savers.

“The PLSA’s RLS provide a valuable benchmark against which people can think about their pension planning, and it makes sense to update those Standards in line with what retirees spend their cash on.

“This is exactly how inflation works and should help ensure the standards remain relevant to people’s experiences.”

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