The Chartered Insurance Institute says the UK faces a £9trn retirement savings deficit and is urging the financial services sector to “embrace reforms” to tackle the gap.
A report from the institute, published this week, suggests the average pensioner’s savings will fall short of what is required to adequately cope with day-today living expenses and the costs of long-term care.
The £9trn deficit figure, which equates to an average annual shortfall of £16,700 per person, assumes pensioners retiring over the next 40 years achieve the current average retirement income, all have debts to pay down and one in four need long-term care.
The CII says there are “significant barriers” to long-term saving in the UK, including complexity surrounding the UK’s tax system, trust issues due to misselling scandals, uncertainties about the future and a low level of knowledge about the scale of the challenge that will face individuals entering retirement.
Director of policy and public affairs David Thomson says: “It is clear the scale of the problem is massive but not insurmountable. The financial services sector must shoulder its responsibility and embrace reforms in legislation aimed at improving the standards of living and levels of trust in financial products and providers.”
Thomson also urged cross-party collaboration “to provide the public with certainty” around future retirement rules.
In a contribution to the rep-ort, pensions minister Steve Webb says: “The next generation faces a different world, with increasing life expectancy, the decline in final-salary schemes and lower annuity rates. They are going to have to take greater personal responsibility for their retirement.”
Informed Choice managing director Martin Bamford says: “$9trn is a shocking number. We have known for a long time that there is a savings gap in the UK and steps need to be taken to close it.
“But I am not necessarily sure that is down to IFAs, I think it has got to be a Government responsibility.”