Ian Bell: The current approach fails to recognise that we have a slow burning crisis building
The next government should form a cross-party working group to address pension issues, RSM UK says.
The audit and advisory firm's head of pensions Ian Bell said saving for retirement was a long game – but noted the current approach, where pensions policy depends on who is in government, encourages short-termism.
He said: "We'd like to see a cross-party working group established which would enable people to plan for retirement with greater certainty.
"Auto-enrolment (AE) is a great example of what can be achieved when all parties work together to address pensions issues. It's been successful in ensuring the majority of workers save into a pension, however it doesn't go far enough in terms of the amount saved. The current approach of automatically saving 8% 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. Many are unaware that the 8% of salary saved into pensions under auto enrolment is unlikely to be enough to guarantee a comfortable retirement.
"We'd also like to see a commitment to better financial literacy, so younger generations understand that saving for retirement is not just an older person's issue. Raising the 8% AE amount has already been acknowledged as necessary, however, as it's unlikely to prove a vote winner, particularly in the current economic climate, no parties are addressing it directly in their manifestos.
"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."
This article was published as part of Professional Pensions' PP Pensions Commission – which is looking to bring together industry opinion and ideas on the future of pensions ahead of the general election on 4 July.
Send your thoughts and ideas to the PP Pensions Commission via email to [email protected].
