Pensions Commission report underscores ongoing industry challenges
Commenting on today’s Pensions Commission Interim Report, Ian Bell, Audit Partner for RSM UK said: “Today’s Interim Report from the Pensions Commission demonstrates the scale of the challenge that remains following the introduction of automatic enrolment in 2012.
“Those of us in the pensions industry were always aware that contribution levels of 8% would need to be uplifted in the future to ensure pension adequacy, but the Commission’s interim findings go beyond that and are truly shocking, with 45% of working-age adults - around 18 million people - not saving into a pension at all, despite nearly half being in work.
“The growth in the gig economy and self-employment, which has effectively doubled since 2012, has clearly undermined the push benefits of auto enrolment, and demonstrates that the nudge of tax relief is not enough to persuade self-employed people to use pension schemes to save for their future. Just 4% - one in 25 - of wholly self-employed workers are saving for retirement, and it’s even lower among younger self-employed people.
“These findings reinforce the need for better financial education alongside the introduction of the long-awaited pensions dashboard. Whether employed or self-employed, awareness of the importance of future financial security must improve in the UK, and future governments must be prepared to improve the tax breaks available for doing so. Waiting another 15 years - a third of a typical working career - before the next Commission assessment on progress must be avoided.
“We’d like to see the Pensions Commission become a permanent body, with cross party consensus, to ensure the findings are heard and implemented. For too long, pensions have been used as a treasury piggy bank, with successive governments making short-term changes without enough consideration for the long-term impact on individuals.
“Now is the time for a long-term strategy, consistency and commitment. It may not be a vote winner today, but it’s vital for the financial wellbeing of future generations.”