A Living Pension
The recent report from the Resolution Foundation “Building a Living Pension” – ‘Closing the pension savings gap for low-to-middle income families sets out the reasons why additions to auto enrolment contributions are important.
An average of 8.1% of income across all age cohorts is deemed required to deliver a living pension.
The benefits of starting early are indicated with 25 year olds requiring 3.2% added while at 45 the figure increases markedly to an additional 13.2% of income.
Links to the Living Wage Foundation do suggest a similar accreditation for ‘Living Pension’ employers who make additional contributions to their employees workplace pensions. I would suggest there should also be accreditation for solutions that deliver similar outcomes, after all, for some employers making additional contributions of 8.1% of income is going to be impossible even for the most caring of employers.
Open finance opens up opportunities for members of workplace pensions also with less reliance on an employer to contribute more. There are ways that contributions can be linked directly to employees and customers engagement. Brands can reach an outcome that is more aligned with their need to increase revenue to in turn be able to make increased contributions.
It should not be so stark as to suggest that if an employer is not able to make increased contributions then they are not a caring employer and should not be living pension accredited’.
There are other ways that a living pension accreditation could be achieved, with a bit of lateral thinking. Any solution that provides a better outcome for pension savers is a good thing, right?
We live in a society with great inequality and pension funding is one of the areas where this manifests itself.
With investment pathways from 1st February 2021 recognising that those without the ability to pay an advisor need help also, the next step is the proposals on Value for Money for pension holders in CP20/9 which should come in to force mid 2021. Trustees should be seeking best value for customers as a matter of course however.
We at AirFunders are pleased to have a solution which is right at the heart of this debate, binding together the value for money required for customers with a way for companies or brands to be deemed as doing something good to help address the pension gap that a great deal of individuals face, as presented in the Resolution Foundation paper.
The direction of travel is very much towards assisting those left behind and unable to build sufficient pension wealth and we all have the ability to act with kindness and compassion to harness some of the community aspects that were apparent at the start of COVID-19. Remember when we used to ‘clap for carers?’