Fair Point | Pensions Special
18 September 2024What will happen to the tax-free lump sum? Will it still be possible to pass on your pension free of inheritance tax? Might some tax reliefs be removed for high earners?
This month we are hearing much speculation about what changes the Chancellor might announce in October's Budget. You won’t be surprised that our partners have a number of recommendations for her. The Pensions Review, a major partnership between the Trust and the IFS, has published three more reports on pensions this month and held an event to share their findings attended by the Pensions Minister, Emma Reynolds MP. In addition, the Living Wage Foundation (supported by the Trust) has calculated the amount workers need to save into their pension pots for a Living Pension and conducted polling into people’s feelings about saving for retirement. Over half of workers fear they may never retire.
Collapse in self-employed people saving into pensions
The percentage of self-employed people earning over £10,000 per year and saving into a pension has fallen from 20 per cent to 60 per cent in the last 25 years. What can be done? Read the Pensions Review’s recommendations for the self-employed.
Up to seven million private sector employees not saving enough
30% to 40% of private sector employees (5 to 7 million people) saving in defined contribution pension schemes are on course to have individual incomes that fall short of standard benchmarks in retirement. Half of those saving into defined contribution pensions are contributing less than eight per cent of the salaries. The Pensions Review suggests a number of ways to address this.
Should employers contribute every time?
Currently employers are only required to match pension contributions up to three per cent if the employee pays into a pension scheme. The Pensions Review suggests employers should be mandated to contribute three per cent every time (for those earning more than £4,000 per annum) whether they contribute or not. Read all the policy recommendations.
Pot needed for a basic retirement is now £110,000
The average pension pot required for a basic standard of living in retirement has surged by 60 per cent, from £68,300 in 2021-22 to £107,800 in 2023-24, according to new research by the Resolution Foundation, commissioned by the Living Wage Foundation. Read about how the calculations are made and what people feel about their retirement prospects.
Magic mirror on the wall
And finally, a bit more light-hearted this one, Scottish Widows have launched a ‘Pensions Mirror’. This spooky tool guesses your age and then tells you what the average pensions savings is for people your age. Try it out. Disclaimer, this tool has nothing to do with us so please don’t blame us if it adds years to you (although in our experience it is weirdly accurate).
This month we are hearing much speculation about what changes the Chancellor might announce in October's Budget. You won’t be surprised that our partners have a number of recommendations for her. The Pensions Review, a major partnership between the Trust and the IFS, has published three more reports on pensions this month and held an event to share their findings attended by the Pensions Minister, Emma Reynolds MP. In addition, the Living Wage Foundation (supported by the Trust) has calculated the amount workers need to save into their pension pots for a Living Pension and conducted polling into people’s feelings about saving for retirement. Over half of workers fear they may never retire.
Collapse in self-employed people saving into pensions
The percentage of self-employed people earning over £10,000 per year and saving into a pension has fallen from 20 per cent to 60 per cent in the last 25 years. What can be done? Read the Pensions Review’s recommendations for the self-employed.
Up to seven million private sector employees not saving enough
30% to 40% of private sector employees (5 to 7 million people) saving in defined contribution pension schemes are on course to have individual incomes that fall short of standard benchmarks in retirement. Half of those saving into defined contribution pensions are contributing less than eight per cent of the salaries. The Pensions Review suggests a number of ways to address this.
Should employers contribute every time?
Currently employers are only required to match pension contributions up to three per cent if the employee pays into a pension scheme. The Pensions Review suggests employers should be mandated to contribute three per cent every time (for those earning more than £4,000 per annum) whether they contribute or not. Read all the policy recommendations.
Pot needed for a basic retirement is now £110,000
The average pension pot required for a basic standard of living in retirement has surged by 60 per cent, from £68,300 in 2021-22 to £107,800 in 2023-24, according to new research by the Resolution Foundation, commissioned by the Living Wage Foundation. Read about how the calculations are made and what people feel about their retirement prospects.
Magic mirror on the wall
And finally, a bit more light-hearted this one, Scottish Widows have launched a ‘Pensions Mirror’. This spooky tool guesses your age and then tells you what the average pensions savings is for people your age. Try it out. Disclaimer, this tool has nothing to do with us so please don’t blame us if it adds years to you (although in our experience it is weirdly accurate).