National retirement income targets should be developed by the government and pension providers to help millions of people save adequately for retirement, an influential trade body says.
A report published today by the Pensions and Lifetime Savings Association finds 80 per cent of people are not confident they are saving enough for retirement, which equates to more than 30 million working age people.
The research also shows 74 per cent think retirement planning would be much easier if the UK had retirement income targets, similar to those currently used in Australia.
Establishing national retirement income targets is one of several recommendations the PLSA makes to improve retirement outcomes for savers.
Other proposals include providers exploring how equity release products can be made more flexible so that savers can supplement their retirement income from borrowing against their home.
Another idea is increasing support at retirement where schemes and providers signpost savers to appropriate product options at retirement.
These options would be selected by trustees and independent governance committees and would adhere to government standards.
These standards would aim to operate in the members’ interests, deliver a sustainable income and offer flexibility for capital withdrawals.
PLSA director of policy and research Nigel Peaple says: “Millions of savers are confused about whether they’re on track for the lifestyle they want in retirement.
“We believe that a simple and widely promoted system of retirement income targets would make it much easier for savers to know whether they are saving the right amount.”
He adds: “However, targets alone will not be enough…We are proposing a range of measures and would like the government, pensions sector and regulators to work together to take these forward.”
Reacting to the report Hargreaves Lansdown head of policy Tom McPhail says: “This report captures a lot of the key thinking on how to move forward with pension policy from here. You can’t expect investors to hit a target if they don’t know what they’re aiming at. This central proposal to develop simple targets for people to engage with will enjoy widespread support from across the pensions industry.”