IFoA welcomes Work and Pension Committee report into ‘saving for later life’

30 September 2022

The IFoA welcomes the publication of the Work and Pensions Committee third stage inquiry report into ‘saving for later life’. The report released today (30 September 2022) is the culmination of many months of evidence submissions and in-person representations, including from IFoA Pensions Board Chair Leah Evans.

Leah Evans attended the Work and Pensions Committee in March to give evidence on a wide range of areas including minimum auto-enrolment contributions, how to ensure people are saving enough for later life and whether or not advice and guidance is being used most effectively.

Leah Evans, Chair of IFoA Pension Board, said: “We welcome the report as a good overview of the challenges facing the modern pension saver and support the recommendations to help ensure that we can help them save enough for retirement. We remain concerned that many UK households are not saving enough for later life, and that many are ill-equipped to deal with the risk of running out of money in retirement. We are pleased the Committee acknowledges the IFoA Savings goals for retirement work.

“While pension freedoms now offer individuals much more choice and flexibility, recent IFoA research shows that many are still not confident about decisions around their pension pot as they approach retirement. Worryingly, there is also a lack of understanding around how their pension is being managed and invested.

“There is much that can be done to help people remedy this position. For example, Automatic Enrolment (AE) has been praised for getting more people saving into a pension, with over 10 million new savers now enrolled, and we agree that this is a good thing. However, the stark reality is that current minimum contribution rates of 8% (3% from employers, and 5% from employees) are unlikely to be sufficient for many individuals to secure a standard of living that they may want or expect. We are happy to see recommendations from the Committee on this, and other issues, included in this latest report.”

The Work and Pensions Committee also acknowledged that its report comes at a challenging time, with many people grappling with higher inflation rates and meeting immediate needs.

Leah Evans continued: “We agree with the Committee that while it is difficult to raise questions of saving at this moment, it is important to face up to the challenges that under-saving may pose for many when they come to retirement. The issue of high inflation, while a problem in and of itself, may also be highlighting other issues that could deteriorate the position of pension savers in the UK. It may be that while people are concerned about inflation, most don’t have the luxury of doing anything about it and people are more likely to reduce pensions savings if they can’t afford to continue with them due to the higher cost of living.”