Enable’s IFAs in Bishop’s Stortford often meet people who are planning financially to make sure they are not retiring on an income below the living wage. But it is a concern that currently people earning the average wage of £27,500 run the risk of retiring on a pension of far less than £15,000, which is the equivalent of the current national living wage.
The figures come from Aviva, the insurer and pensions provider. Their research indicates that since the introduction of automatic pension enrolment introduced in 2012, some 10 million people have started saving, many of whom would not have done so before. This has to be a good thing but the problem is that the minimum requirement is that 8% of pensionable earnings must be contributed at present, 5% by the employee and 3% by the employer. This contribution could mean millions of people retiring on a pension of far less than £15,000. They want contributions increased to 12% of earnings over the next decade.
Alistair McQueen, head of savings and retirement at Aviva said. “We need to look again at the auto-enrolment system. It achieved its goal of getting people to save, but the 8% minimum may be inadequate to give people a comfortable retirement. Millions risk disappointment at retirement.”
Enable’s IFAS alongside other pensions campaigners have also called for the industry to do more to encourage people to save. Ros Altmann, the former pensions minister and campaigner for reform of the system has said. “It is time that companies worked hard to persuade and enthuse people to want to buy more pension. Forcing others to hand the industry more money seems to be a sub-optimal approach.”
Enable’s IFAs in Bishop’s Stortford can help you look at more and more creative ways to save more for your retirement. It is important to make sure you save enough so your pension is not way below the average living wage.