Phoenix Insights has urged the government to develop a more flexible and engaging savings system as one of five of its recommendations to improve retirement adequacy.

The think tank said the government’s upcoming review provided the ideal opportunity to assess the urgent policy changes that are needed to address the widespread issue of under-saving in the UK.

To protect lower earners, Phoenix Insights said the government should improve the flexibility of automatic enrolment by requiring employers to continue their contributions during opt-out and introducing sidecar products to allow emergency access to some contributions.

It also urged the government to further develop automatic enrolment. This could be achieved by incrementally raising contributions based on agreed economic metrics and reconsidering the qualifying criteria in conjunction with any decision to increase contribution rates.

As part of its recommendation to encourage employment up to state pension age, the group recommended that the government addresses unemployment and economic inactivity among workers aged 50 and over by fostering a more age friendly culture.

This could include promoting inclusive employment practices, such as flexible work, paid carers leave, and support for health and wellbeing, as well as creating a well-funded national strategy for career guidance and advice.

Phoenix Insights also suggested that the government improves support for decumulation decisions by reforming the current advice and guidance regime to serve a wider audience and clearly defining the requirement to offer decumulation defaults.

The use of a single definition of adequacy across workplace and state pension policies, especially when defining under savers and the protection they need, would also be beneficial, it added.

Phoenix Insights director, Catherine Foot, said: “The government’s commitment to assess retirement adequacy is a critical opportunity to set out a plan to tackle under-saving and improve the retirement prospects of future generations.

“As many as 17 million people are not saving enough to achieve the retirement they want, and the next two decades is when the effects of the savings crisis will really start to bite.”

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