Pension news
A clear, uniform new pension dashboard A SURVEY by the membership organisation TISA (Tax Incentivised Savings Association) of firms across the pension industry exploring views on the forthcoming pensions dashboard reveals that industry insiders agree that: ● a multiple dashboard solution would be preferred over a single dashboard (71%) ● it would need to be mandatory for pension providers to participate to ensure full coverage (96%) ● information made available by all providers would need to be standardised (89%) ● the dashboard would need to use a set of open digital standards to ensure it is secure (85%). Nearly all participants (96%) agreed there would need to be mandatory involvement for all pension providers to make the dashboard a success. Charles McCready, strategic policy director at TISA, commented: “It’s vital that the dashboard is future-proofed to make sure that it keeps up with evolving technology and we need to make sure that we’re keeping consumers details safe without making the platform too difficult to access.”
UK workers embrace AE THE GLOBAL study – the Aegon Retirement Readiness Survey 2018 – reveals that workers in the UK place greater emphasis on workplace pensions in helping them build their retirement income. Compared to fifteen countries, UK workers were the second most likely globally to cite employment-related reasons for saving for retirement, with 25% of workers saying that being automatically enrolled was the nudge they needed. UK workers would support paying up to 7% of their annual salary into a pension every year, more than double the current automatic enrolment (AE) default rate of 3% and above the 5% level coming into force in 2019. Younger workers would support an even higher contribution level, at 8%, and nearly one in six of those in their twenties would be willing to pay between 11% and 15%. Globally, people expect workplace retirement plans to fund only 24% of their overall retirement income, but people in the UK expect more than a third (34%) of their retirement income to come from workplace pensions. Kate Smith, head of pensions at Aegon, said: “As the reliance on governments shifts, we need to ensure that access to saving is universal, allowing employed workers to save for retirement as well as alternative arrangements for the self-employed and those not in the workforce.”
Saving to retire at age 55 WORKERS WANTING to put their feet up by the time they reach age 55 will need to squirrel away around £1,000 a month (net of tax relief) from age thirty, according to retirement experts The Pension Review Service (PRS). A savings plan of this amount should in principle achieve a big enough pension pot to deliver an annual income of £26,000. One of the keys to being able to retire at 55 is to give one’s pension pot as much time as possible to benefit from the effect of compound returns, says PRS’s Mark Abley. “For example, a thirty-year-old who starts putting aside £1,000 a month, increasing with inflation, could build a retirement pot of around £625,000 in (today’s money) by the time they’re 55. If they’d started their pension pot five years earlier, they would have a pot of £668,000 at 55 – these figures assume that returns and inflation remain steady.” ‘Pretirement’ the new norm ACCORDING TO Prudential’s latest annual research, ‘pretirement’ – where people scale back on work or slow their retirement plans down rather than giving up entirely – is continuing. The study found half (50%) of those retiring this year are considering working past state pension age (SPA), which is the sixth consecutive year where half of people retiring would be happy to keep working if it meant guaranteeing a higher retirement income. A quarter (26%) of those planning to delay their retirement would like to reduce their hours and go part-time with their current employer; one in seven (14%) would like to continue full-time in their current role; and one in five (19%) would try to earn a living from a hobby or start their own business. The research, which tracks the future financial plans and aspirations of people planning to retire in the year ahead, shows that the ‘Class of 2018’ expect their retirement to last an average of twenty years, but 8% of those scheduled to retire this year have postponed their plans because they cannot afford to retire. Almost half (47%) of these put this down to the cost of day-to-day living. Prudential’s research also found that the decision to put off retirement isn’t always a financial one: 54% who are already or are considering working past SPA say it is to keep their mind and body active and healthy; and 43% admit they simply enjoy working; while 26% don’t like the idea of being at home all the time. Stan Russell, a retirement income expert at Prudential, said: ‘The shift to ‘pretirement’ in recent years shows that many people reaching [SPA] aren’t ready to stop working. Reducing hours, earning money from a hobby or changing jobs are all ways to wind down from working life gradually and for many to avoid boredom and maintain an active mind and body.”
| Professional in Payroll, Pensions and Reward | July - August 2018 | Issue 42 32
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