Three-quarters of UK workers off track for a 'moderate' retirement income
A new report published in the United Kingdom finds that almost three-quarters of workers are off course to secure a 'moderate' retirement income. The independent Pensions Review Commission is examining higher auto-enrolment contributions and a new framework for self-employed workers.
BBC BusinessAn interim report published on Wednesday by the government-appointed independent Pensions Review Commission concludes that some 74% of workers in the country will not reach the £31,300 a year required for a 'moderate' retirement living standard. The commission said the current 8% auto-enrolment contribution rate is 'insufficient' and that stepping it up gradually to 12% should be considered.
Auto-enrolment, in force in the UK since 2012, requires employers and employees to set aside a share of pay for retirement saving. The commission said the scheme leaves out 4.3 million self-employed workers and that lower-paid female workers accumulate on average half as much as their male counterparts. Charlotte Higgins, the commission's chair, told the BBC: 'If we do not act now, part of this generation will fall below the poverty line in retirement.'
The report proposes a new 'single-pool' framework that would bring self-employed workers into the scheme, alongside a government top-up of up to £50 a month for the lowest earners. A Treasury spokesperson said the government would consider all the policy options 'with an open mind'. The commission's final report is due in autumn 2026; the required legislation is expected to be presented to parliament alongside the autumn budget. Comparative data show the Netherlands and Denmark continue to lead the world on retirement-saving rates.
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