Higher minimum contributions to pension schemes and turning the regulatory screw would help plug shortfalls in retirement income and reverse shrinkage in Britain’s capital market, think-tank New Financial said in a report on Tuesday.

A welter of regulatory reforms to bolster London’s capital market and boost the flow of money from pensions into investments is a good start, but more is needed to avoid pensioners having too little to live on, said New Financial CEO William Wright.

“This isn’t something that we can keep kicking down the road,” Wright told reporters.

The report, written in partnership with Citi bank and abrdn asset management, said there is a “parallel crisis” in Britain’s pensions and capital market as too little investment flows into UK-based companies and asset managers play safe with government bonds.

“I would wonder if there’s something in the Consumer Duty that says there’s something about having too much money in a bank account when you don’t need it, you should be putting money into something that is better than that,” abrdn chair Douglas Flint said.

Regulator the Financial Conduct Authority’s Consumer Duty introduced in July requires financial firms to ensure that customers are getting fair value on their investments, and to point out better deals where available.

The report said an employee currently has to contribute a minimum of 8% of earnings to a defined contribution (DC) pension scheme, a “woefully inadequate” level.

This fails to build a big enough pool of money that allows more investment in riskier assets like start-up companies and infrastructure, and reverse a shrinkage in listings.

The median DC pension pot for people aged 55 to 65 is just 35,000 pounds ($44,177), giving an annual pension of 1,750 pounds, meaning a social security safety net is often needed.

“You have to have a glidepath to getting to 15% to 16%. The big issue is the contribution rate,” Flint said.

The report rejects mandating pension funds to invest in certain assets, but notes that 48 billion pounds in net tax relief on pension contribution in 2021 alone means there should be a “social contract” to create some form of “quid pro quo” from the sector.

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