Trade association Pensions UK has published a report claiming that the country requires a pensions settlement that delivers better retirements, stronger growth and more sustainable public finances.

The Better Pensions Dividend sets out why pensions reform should be seen as part of the UK’s wider economic strategy, not only improving retirement outcomes but also helping to unlock long-term investment and support growth.

The report collated evidence from a diverse range of experts to demonstrate why under-saving poses a “significant and imminent” economic risk.

It highlighted modelling by Oxford Economics on behalf of Royal London showing that higher pension saving can support stronger medium- to long-term growth by increasing the supply of capital available for investment. It also cited analysis suggesting that moving to 12 per cent contributions, applied from the first pound of earnings, would generate £17bn a year in additional pension contributions.

Zoe Alexander, chief policy officer at Pensions UK, says: “Pension reforms are not only necessary; they are urgent. Better pensions can deliver a wider dividend through stronger household resilience, improved retirement incomes, larger pools of investment capital, stronger growth and reduced long-term pressure on the public finances.”

Improving pension adequacy was also also identified as an urgent concern in the report, with Pensions UK claiming that automatic enrolment has increased participation but not yet delivered sufficient retirement incomes for millions of savers, particularly younger workers, low earners, women, carers, part-time workers and the self-employed.

The report estimated that increasing automatic enrolment contributions to 12 per cent could provide a typical 18-year-old with an extra £96,000 in their pot by the time they retire, while broader coverage would improve outcomes for low and middle earners, women, part-time workers, multiple job holders and the self-employed.
The paper was published prior to the Pensions UK conference, due to take place in Liverpool from 13th to 15th of October.

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