On the go: The Pensions and Lifetime Savings Association has launched its retirement living standards, an attempt to translate savings targets into a description of the quality of life they will actually enjoy in later life.
Roughly speaking, a single person will need £10,200 a year in retirement to achieve the minimum living standard, £20,200 for a moderate lifetsyle, and £33,000 a year for comfortable.
The industry group anticipates summarising these figures as “10k-20k-30k”, or 15k-30k-45k for couples.
Unveiled at the PLSA’s annual conference on Thursday, the minimum, moderate and comfortable lifestyles are calculated by reference to a basket of goods and associated costs including household bills, food and drink, transport, holidays and leisure, clothing and personal, and helping others.
The PLSA is calling on the industry to adopt and develop the standards so they become a key first step in savers’ pension planning.
The minimum lifestyle covers basic needs plus enough for a moderate amount of luxuries. For example, it could include a holiday in the UK, eating out about once a month and some affordable leisure activities about twice a week. Through a combination of the full state pension of £8,767.20 per year, and auto-enrolment in a workplace pension, this level should be achievable for most people.
The moderate lifestyle (£20,200 a year for singles and £29,100 for couples) provides, in addition to the minimum lifestyle, more financial security and more flexibility. For example, a two-week holiday in Europe and eating out a few times a month.
At the comfortable level (£33,000 a year for singles and £47,500 for couples), retirees could enjoy some luxuries like regular beauty treatments, theatre trips and three weeks in Europe a year.
Nigel Peaple, director of policy and research, PLSA, said: “Goal setting can help people plan, and a series of simple standards could transform pensions engagement “The 5-a-day campaign did a lot to change perceptions about healthy eating. We hope the Retirement Living Standards will transform the way people think about what money they might need for their retirement.
Guy Opperman, Minister for Pensions and Financial Inclusion, said: “It’s great to see what the PLSA has developed, which has the potential to help savers think about the future and plan for the retirement they want.”
Jackie Spencer, senior policy and propositions manager, Money and Pensions Service, said: “The new Retirement Living Standards are a great way of offering savers some practical examples of what they can expect from their lives when they stop working. The Money and Pensions Service has agreed to be an early adopter of the new standards and will be looking to incorporate them into pension guidance and our online pension calculator.”
