Smart Pension, a workplace pension provider, has released a report outlining recommendations for the UK’s new Labour government to ensure the financial security of UK savers in retirement.
The nation’s July general election saw the Labour party sweep to power with a landslide victory. Smart Pension is now calling on the new administration to use the time between 2024 and 2030 to put UK workers in a better position for their retirement, with a bold programme of change, ensuring that “no saver is left behind”.
In its report – Delivery 2030: A blueprint to transform the UK pension system – it said the current approach to improving the pension system and retirement saving has been piecemeal and it allows individual initiatives to be pushed forward. However, it added that it does so to the detriment of “key” stakeholders.
Smart Pension suggested that a switch to a more “customer-centric” approach is essential, suggesting seven key attributes to successful delivery of the UK pension system:
- a single forward-looking strategy;
- a specific timetable;
- sequencing;
- forward-looking enough to provide medium-term capacity;
- wider support from stakeholders outside the pension industry;
- bridging the gap;
- getting people to save enough, but not too much.
It acknowledged that reaching a “pension nirvana” would take some time to achieve. However, that does not mean that progress needs to wait. Smart Pension pointed out that there are several “no regrets” decisions that should be acted upon swiftly, to set a timetable for achieving impactful change quickly.
These include:
- lowering the qualifying age for automatic enrolment from 22 to 18, and removing the lower earnings limit, so that contributions are made from the first pound earned;
- implementing the pensions dashboard;
- setting a clear timetable for increasing minimum contribution rates to 12%.
Pension commission
The report also prioritised considered, long-term policy decision-making over eye-catching but short-term changes. It argued that a new and independent Pensions and Savings Commission would help to formulate a long-term national savings strategy with cross-party support, and ensure that all UK savers have enough money to live comfortably when they reach retirement.
It suggested that the committee could tackle topics such as coverage and proposed levels of pension provision, levels of savings, inequalities in the pension system, solving the small pots challenge, taxation, regulation and efficacy of the dual-regulator system, among others.
Jamie Fiveash, chief executive officer of Smart UK, said: “Today’s workers are navigating the biggest shift in demographics for many generations, which poses a great threat to the retirement-savings system.”
He added that people are not saving enough “and the system works against them in many ways”.
“Now is the time to act and use the time between today and 2030 to implement a plan which will ensure that no saver is left behind,” he said.
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