PLSA proposes national retirement savings target
15 October 2017
The Pensions and Lifetime Savings Association has launched a new consultation designed to help consumers better plan for their retirement, including national retirement income targets.
Following the revelation that 78% of people aged 18 to 64 years old were not sure or did not know where to look to tell if they were on track with their retirement savings, the Association’s Hitting the Target- Delivering Better Retirement Outcomes consultation will consult on the development of new national retirement income targets and on the changes to the current retirement saving system to meet those targets.
The National Retirement Income Targets provide savers with tangible income goals which take into account what they need to save in order to achieve different standards of living in retirement, ranging from minimum to comfortable.
The PLSA’s decision to launch a consultation comes as more than three quarters of people admit they do not know how much they need in later life and four out of five believe that a national retirement income target would help them plan for later life.
Graham Vidler, director of external affairs at PLSA, said: “Retirement planning is confusing for most of us and is one of the areas that people frequently speak to their intermediaries about. We believe that a set of Retirement Income Targets could benefit both clients and their advisers as it will provide a nationally recognised standard that people can work to achieve over their working lives. The PLSA is particularly keen to engage with intermediaries as part of this consultation as they understand the challenges people face whether they have just started saving for retirement or about to finish work.”
As part of the consultation, in-depth analysis will be carried out to determine exact income levels, but initial research among those between 55 and 64 years old suggested a minimum would be between £10,000 to just under £15,000, while a comfortable level was deemed anything above £25,000.
In addition, savers will also require help reaching those targets and as part of its consultation, the PLSA will be looking at ways in which it can help people learn about their money in a way that makes sense to them, highlight the importance of auto enrolment, explore how property wealth could be turned into retirement income and look at how people can be supported in realistic extensions to working lives.
Vidler added: “Savers will need support as they work to achieve the Retirement Income Targets and we need to consider what might need to change within the UK retirement and savings market to facilitate these steps forward. Advisers spend a considerable amount of time helping their clients navigate the retirement market so we are particularly keen to hear their views. Our report sets out some of the changes we think are necessary but we want everyone with an interest in the nation’s retirement future to respond – challenging, improving and building on our proposals.”
The PLSA will engage with the Government as part of the consultation process.
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