Help to save: defusing the pensions time bomb

Document type
Barty, James
Policy Exchange
Date of publication
22 January 2014
Poverty Alleviation Welfare Benefits and Financial Inclusion, Older Adults
Social welfare
Material type

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This report finds that 11 million people are at risk of entering ‘pensioner poverty’ when they retire, and urges the government to make it compulsory for people to save for later life. The report shows that someone earning the average wage (£27,000) will need to save over six times more than they currently do to generate the government’s recommended retirement income of £16,200. The average pension pot is estimated to be just £36,800, which on current annuity rates is enough to generate a retirement income of £1,340. The report says that an average earner would need a pot of £240,000, assuming they receive the full single tier pension. 

One way to defuse the demographic time-bomb would be through a new ‘Help to Save’ scheme. This would make it obligatory for people to save for their retirement by removing the opt-out in the existing auto-enrolment scheme while also increasing individual contributions to pensions as their incomes rise over time.

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