As the lead-up to the general election continues, very little has been said by any political party on the subject of pensions. Perhaps this is not surprising, as there are many issues that surround pensions that are somewhat controversial and could provide sticky wickets for parties if not handled properly. Issues include the pensions triple lock and the state pension age for women which has seen millions of women have to work longer for their pension. There's also the issue of auto enrolment which has been a huge success but now questions are being asked how this success should be built upon and ensure that millions more people have properly funded retirements. It's something that leading pension consultant Jon Hatchett has called for:
"I am a strong advocate of auto-escalating auto-enrolment. When someone receives a pay rise, part of that, and associated tax relief should be used to increase pension contributions as a default. That way people do not notice a drop in take-home pay but over time their retirement savings increase very meaningfully. It now takes 50% of pay to fund a decent DB pension. 8% of pay is not going to close the gap. We should be setting a plan to get to 15% over the next 10 to 15 years."
Actuaries too have been calling for auto enrolment contributions to be increased. Bob Scott, Chairman of the Association of Consulting Actuaries recently wrote:
"On private pensions, we want the parties to be much clearer on what they intend to do over the next 5 years to extend auto-enrolment pensions to what will be, by 2018, over 8 million employees presently excluded from the scheme. We also feel the public need better to understand why minimum AGE pension contributions need to increase and what the parties are proposing in this area."
Whilst auto enrolment has been an undoubted success, there's no doubt that there is more that can be done. According to recent figures, the number of UK workers who are unlikely to retire without an adequate pension income has increased from 66% to 75% since the decision was made to leave the European Union.