Pension Awareness Day prompts call for system change
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On Pension Awareness Day, taking place on 15 September, one provider is calling on the Pensions Commission to improve adequacy for “invisible workers being left behind by the system”, while another highlighted that half of people appear to be unprepared for retirement.
Provider PensionBee said the Pensions Commission tasked with assessing why future retirees may be poorer than today's presents an opportunity for reform as current system design still excludes large parts of the workforce from auto-enrolment.
Among others, the firm is calling on the government to give self-employed workers an easy way to opt in and stay enrolled by automatically deducting pension payments through their self-assessment tax returns, having found that 60% of self-employed and freelance workers cannot afford to save into a pension, while 70% of gig workers would support universal pension inclusion regardless of income, employment status or hours worked.
Lisa Picardo, chief business officer UK, said: “Whilst auto-enrolment has been transformative for employees, the promise of a secure retirement remains a dream for millions of people simply because they don’t fit into the traditional employment model.
“On Pension Awareness Day, we stress the need to fix the system to support retirement savings for today’s invisible workers, who will become tomorrow’s pensioners. The Commission has a golden opportunity to be a catalyst for overdue change, re-shaping the system so that it gives every worker a fighting chance of security in retirement. A secure retirement should not be seen as a privilege that is reserved for those who fit traditional forms of employment.”
Provider PensionBee said the Pensions Commission tasked with assessing why future retirees may be poorer than today's presents an opportunity for reform as current system design still excludes large parts of the workforce from auto-enrolment.
Among others, the firm is calling on the government to give self-employed workers an easy way to opt in and stay enrolled by automatically deducting pension payments through their self-assessment tax returns, having found that 60% of self-employed and freelance workers cannot afford to save into a pension, while 70% of gig workers would support universal pension inclusion regardless of income, employment status or hours worked.
Lisa Picardo, chief business officer UK, said: “Whilst auto-enrolment has been transformative for employees, the promise of a secure retirement remains a dream for millions of people simply because they don’t fit into the traditional employment model.
“On Pension Awareness Day, we stress the need to fix the system to support retirement savings for today’s invisible workers, who will become tomorrow’s pensioners. The Commission has a golden opportunity to be a catalyst for overdue change, re-shaping the system so that it gives every worker a fighting chance of security in retirement. A secure retirement should not be seen as a privilege that is reserved for those who fit traditional forms of employment.”
The call is made as government figures show about 45% of working age people are not currently saving into a pension, for being ineligible for automatic enrolment, being self-employed or not working.
The government recently set up a new – or ‘revived’ – Pensions Commission to report back in 2027, less than six months after the pensions minister dismissed calls for a commission as misplaced during a conference. The commission is tasked with looking at what is needed to build a future-proof and fair pensions system.
The government recently set up a new – or ‘revived’ – Pensions Commission to report back in 2027, less than six months after the pensions minister dismissed calls for a commission as misplaced during a conference. The commission is tasked with looking at what is needed to build a future-proof and fair pensions system.
Another provider highlighted that many people are not thinking about or preparing for retirement. Provider Scottish Widows pointed to its Retirement Report finding that half (51%) of people admit they have done little to no research on how much they need to save for retirement.
Its figures suggest nearly a quarter (23%) are not currently saving for retirement, while two-fifths (39%) are saving far below for what they will need in later life. The research also found that a quarter (25%) do not feel confident managing their pensions because they are not sure how they work.
“Our research paints a stark picture of how unprepared people in the UK are for retirement, with many admitting to not doing enough to support themselves later in life. This puts them at risk of being one of the 15.3m people facing poverty in retirement,” said Robert Cochran, retirement expert at Scottish Widows.
He added: “Pension Awareness Day offers an opportunity to take stock of retirement plans and ensure people are on the right track with their long-term savings by providing practical tips and online resources to better support people in making the right decisions to build up a comfortable retirement.”
The Scottish Widows report found, for example, that about half of self-employed workers are on track to have less than the minimum lifestyle as defined by Pensions UK.
Apart from employment type, the report suggests the type of pension people are enrolled in is one of the biggest differentiators. Nearly three-quarters (73%) of those with DB pensions are on track for a comfortable lifestyle, something just 30% of workers in DC can look forward to, where most (37%) are headed towards the minimum level instead.
Lack of retirement preparedness is not just an issue among younger people, either. Annuity provider Just Group’s GenVoices research found that fewer than half of workers aged 60 plus feel prepared for retirement.
Group communications director Stephen Lowe said: “There are more than 3m working people aged between 60 [and] 69 in the UK, and our figures suggest that at best a million feel prepared for the step into retirement.”
In the 60-64 age group, three-quarters (76%) had not yet retired, with 38% of them saying they did not feel prepared for retirement. For the age group 65-69 – falling into state pension eligibility – just under a third (31%) were yet to retire. Of these, 31% felt unprepared.
Its figures suggest nearly a quarter (23%) are not currently saving for retirement, while two-fifths (39%) are saving far below for what they will need in later life. The research also found that a quarter (25%) do not feel confident managing their pensions because they are not sure how they work.
“Our research paints a stark picture of how unprepared people in the UK are for retirement, with many admitting to not doing enough to support themselves later in life. This puts them at risk of being one of the 15.3m people facing poverty in retirement,” said Robert Cochran, retirement expert at Scottish Widows.
He added: “Pension Awareness Day offers an opportunity to take stock of retirement plans and ensure people are on the right track with their long-term savings by providing practical tips and online resources to better support people in making the right decisions to build up a comfortable retirement.”
The Scottish Widows report found, for example, that about half of self-employed workers are on track to have less than the minimum lifestyle as defined by Pensions UK.
Apart from employment type, the report suggests the type of pension people are enrolled in is one of the biggest differentiators. Nearly three-quarters (73%) of those with DB pensions are on track for a comfortable lifestyle, something just 30% of workers in DC can look forward to, where most (37%) are headed towards the minimum level instead.
Lack of retirement preparedness is not just an issue among younger people, either. Annuity provider Just Group’s GenVoices research found that fewer than half of workers aged 60 plus feel prepared for retirement.
Group communications director Stephen Lowe said: “There are more than 3m working people aged between 60 [and] 69 in the UK, and our figures suggest that at best a million feel prepared for the step into retirement.”
In the 60-64 age group, three-quarters (76%) had not yet retired, with 38% of them saying they did not feel prepared for retirement. For the age group 65-69 – falling into state pension eligibility – just under a third (31%) were yet to retire. Of these, 31% felt unprepared.
“Retirement decisions – when to stop work, how to take pension income, how to plan for later life – can be daunting. It’s likely many people feel unsupported or unsure where to start,” Lowe suggested.
About three-quarters of working Baby Boomers have a workplace pension, according to Just, but a relatively large proportion (17%) have never had one and a further 10% are unsure.
