The UK’s pension system needs systemic, long-term solutions to ensure everyone can afford to retire, according to panellists at the Pensions UK Annual Conference in Manchester.
Helen Dean, chair of the Standard Life Master Trust, said too many people were excluded from the pension system. She said any definition of adequacy needed to factor in the large number of people who were not even saving into a pension.
Dean expressed concern over the current minimum level of auto-enrolment employer contributions, warning that it may have deceived younger savers into thinking they were putting enough aside for retirement.
She said: “The message we hear is that the government has said 8%, so that’s okay. Our research has found that millennials and those in Generation Z felt they were saving enough.”
There is a strong consensus across the industry to implement the recommendations of the 2017 review of auto-enrolment, which includes raising minimum contributions. However, the government has indicated that it has no intention of raising contributions during this parliament.
Dean added that auto-enrolment had been powerful but that systemic change was still needed.
“We need all parties to buy into change that will last,” she said. “There’s no way of changing pension systems to see them change again in three years’ time.
“We also need all parties involved. It’s not just about what the government does, it’s as much about what the industry does, what employers do, and what individuals do”
Joanne Segars, chair of trustees at Now Pensions, urged the industry to be realistic about its ability to meet other challenges.
She said: “We can’t use pensions to solve all the problems in society. We also need to keep solutions simple – where we have gone wrong in the past is by overcomplicating things.
“We cannot put these issues [pension adequacy] off forever. Once we’ve got that direction, we need to have a roadmap for implementing it, rather than hanging around.”
James Smith, research director at the Resolution Foundation, said the current Pensions Commission was also a great opportunity for an industry reset.
He said: “For a lot of people, adequacy is about having a minimum standard of living. The benchmark the commission should be looking at is the minimum standards needed.”
Delegates were asked whether they agreed with proposals to use pension savings to help save for a house deposit. None of the panellists agreed, with Dean commenting that it would create unnecessary complexity in the system.
