The Living Wage Foundation has launched a new pensions standard to help workers build up adequate retirement income. The living pension is a voluntary savings target for employers who want to support workers in building up a pension to help meet basic everyday needs in retirement.
The savings target, which particularly aims to help lower earners, is 12 per cent of a worker's salary, of which the employer pays in at least seven per cent. Under current automatic enrolment rules, a minimum of eight per cent of eligible earnings must be paid into a workplace pension, with the employer paying in at least three per cent and employees' contributions and tax relief also making up the pot.
Employers who sign up to the voluntary pension standard can refer to themselves as accredited living pension employers and add the living pension logo to their website and other publicity materials, helping employees to identify which firms are offering this.
A survey of more than 3,000 working-age adults who have recently been saving into a pension found that more than half (56%) feel they will never be able to retire and eight per cent plan to cut their contributions in the months ahead, as everyday living costs bite.
Nearly two-thirds (64%) feel they will need to work several years beyond retirement age, and 37 per cent are not confident that they are saving enough to meet their basic needs in retirement, according to the research carried out by Savanta in February.
Some employers have already signed up to the new retirement standard, including Aviva, Phoenix Group, Herbert Smith Freehills, the Good Things Foundation and Wealthify.
The Living Wage Foundation is already known for its campaigning around the real living wage, which is voluntarily paid by thousands of businesses. The foundation said the living pension builds on this work, by helping to provide stability and security for workers in retirement.
Katherine Chapman, director of the Living Wage Foundation, said: "Low pension saving levels are a long-standing issue and our research shows that workers are worrying about an uncertain future. The current cost-of-living crisis is exacerbating the problem. Struggling to make ends meet as living costs soar, many workers are unable to prioritise pension saving, which risks storing up a future crisis of millions unable to afford even the basics in retirement."
Nigel Peaple, director of policy and advocacy at the Pensions and Lifetime Savings Association (PLSA), said: "I am very pleased to support the living pension, which seeks to encourage better pensions and higher employer contributions, especially for employees on a modest income.
"The new initiative, alongside existing measures like the retirement living standards and the pensions quality mark, helps employers and employees identify good provision."
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