Another report has come out indicating that, once again, we are not saving enough for retirement.
This time, it is from Royal London, where the head of policy is Steve Webb, the former pensions minister.
What makes this one interesting is how it spells out exactly how much we would need to save to have some kind of standard of living in retirement.
The upshot of it is, you need to save 20 per cent throughout your working life to be in with a chance of having a decent retirement.
If, however, you pay in just 8 per cent – the minimum required by auto-enrolment (AE) – then you would have to be paying in that amount every year from the age of 22 onwards and retire at 77, if you wanted to get two-thirds of your pre-retirement income.
While AE has done some degree of work in highlighting the need to think about our long-term future, it is not at all apparent that the general population is getting the message.
Many operate under the mistaken belief that simply putting a small amount away each month will ensure they are planning for a safe and secure retirement.
Instead, they may be shocked to learn they will only, if they’re lucky get half of their pre-retirement income, and that it is taxed when they come to take it.
Many in government have realised that Pension Wise was misconceived. Despite the glaring need for ‘guidance’, never mind ‘advice’, people have not used its services.
We can only hope that the Chancellor in the run-up to the Budget is seriously contemplating a voucher system for real financial advice. People respond to the perception of getting ‘free’ money; if they could just experience real financial advice for an hour or two they could see the benefits, and be confronted with the reality of their situation.
