A landmark new report today (12 October) lays bare the retirement adequacy challenge facing millions of Brits.
Around half of savers risk missing retirement targets set by the Pensions Commission in 2005, according to the PLSA.
AJ Bell research previously revealed auto-enrolled workers expect to need over £30,000 a year in retirement income – and risk falling £200,000 short of the fund needed to achieve that goal.
Policymakers face “generational challenge” of boosting long-term savings rates and short-term financial resilience during a cost-of-living crisis
Tom Selby, head of retirement policy at AJ Bell, comments: “The first step of automatic enrolment was boosting the number of people saving something for retirement. On that measure alone the reforms have been hugely successful, with around 20 million people now saving in a pension scheme and opt-out rates low.
“Policymakers now face a generational challenge and one which will shape the financial futures of millions of people – how to increase the amount people save for the short, medium and long-term?
“This would be difficult enough during ‘normal’ economic times but is made even harder during a period of huge economic uncertainty, with inflation running wild and millions of households braced for further pain as mortgage costs spiral.
“To give you an idea of the scale of the challenge, AJ Bell research suggests around a third of people have either opted out or are considering opting out of their pension scheme in response to rising inflation.
“What’s more, there are certain groups, including self-employed workers and those with multiple low-paid jobs, who are currently excluded from auto-enrolment and at severe risk of saving little or nothing for retirement. Boosting savings rates among these groups needs to be a core policy objective for the current and future governments.”
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