A member survey from TPT Retirement Solutions indicates that most pension savers want clear policies from political parties to help improve retirement prospects.
Almost all respondents – 96% – said they would support measures to increase retirement savings, including higher minimum contributions and lowering the age and earnings limits. The government already has the power to do this but has yet to enact the legislation it passed last year.
TPT’s research found that three quarters of workers said they would be more likely to vote for a political party that had a plan for reforming the defined contribution (DC) pension system.
Almost nine in 10 (88%) of the 2,011 respondents to TPT’s survey said they wanted the next government to improve support for people to save for their retirement.
David Lane, Chief Executive of TPT Retirement Solutions, comments:
“Currently, most people are not saving enough for retirement and many struggle with retirement decisions,” said David Lane, chief executive of TPT Retirement Solutions. “Any political party that tackles these issues could be rewarded at the ballot box.”
Pension-specific policies have so far been few and far between in the run up to the 4 July general election. Last week the Conservative party announced plans for a “triple lock plus” addition to the state pension that would ensure that retirees do not have to repay any of their state benefit as income tax.
Earlier this year, the Labour party set out plans for a wide-ranging review of the UK pension system including auto-enrolment and the consolidation of schemes.
Retirement worries
TPT’s research found that respondents were concerned about their retirement prospects, with 57% saying they were worried that they were not saving enough into their pension.
In addition, 45% said they thought people would face poverty in retirement with serious system reforms.
Seven in 10 (71%) said they felt the government was responsible for “ensuring access to adequate pensions”, according to TPT.
Complexity was also a key issue, with 96% of respondents saying they would support a party with policies to make pensions easier to understand.
A similar proportion (91%) also said they would support tax reforms to make it easier to save for retirement.
Support for ‘pot for life’?
Based on these responses, TPT set out a series of recommendations to the next government for changes that Lane said “could significantly improve the retirement savings of millions of people”.
On top of expanding the scope of auto-enrolment through higher contributions and lowering the age and earnings limits, TPT called for all DC schemes to be required to offer a default decumulation option – something that the current government had begun to consult on.
The pension provider also called for the introduction of “some form of pot for life” to support younger workers to take their pension pot with them when they change jobs.
TPT also proposed including value for money metrics in the pension dashboard models to improve comparability of pension offerings, and called for the introduction of “sidecar” savings vehicles alongside DC pots that can be withdrawn before retirement if needed.
A similar sidecar concept has been piloted by Nest since 2018.
Further reading
Election called: Key issues for the pensions industry (22 May 2024)
Delays and uncertainty for pensions as election called (27 May 2024)
