Editorial: Known unknowns

The one that sparks most interest is what a twenty-something auto-enrolled this month will get in retirement.

A range of the estimates I have collected from press releases include £16,936 a year, £1,600, £5,000, £12,000, £17,000, a 32 per cent chance of £20,000, £10,200 and £18,000. Confused? You should be. And God knows what the public is thinking.

Of course, this is not entirely fair. All of these predictions come with unique circumstances and caveats. Some include the state pension, some do not. Some are for employees earning £20,000, some for £25,000 and some for £30,000. Some factor in taking the tax-free lump sum, some do not. One has a retirement age of 70, though most pick 65. Some even factor in higher contributions than 8 per cent. I say “even”, as the point of most predictions is to illustrate that 8 per cent is unlikely to be enough to meet people’s expectations of how they will live in retirement.

The predictions from actuarial companies, with their strong aversion to risk, tend to present the worst-case scenario, those from providers are a little better.

Our industry is worried about mis-selling, it is worried about reputational damage, it also has many altruistic individuals who are genuinely concerned for UK savers. Though, as I stated last week, this is an overwhelmingly gloomy outlook. When anything is invented, there is always a need to state its dangers, but this needs to be balanced with more positive calculations.