PRIVATE sector workers are facing a bleak retirement under current UK schemes, with up to 14m private sector workers facing the prospect of receiving a pension much smaller than the generation above them, a report into the sector will say today.
The Workplace Retirement Income Commission (Wric) says that the results of its call for evidence on the UK pension system raise particular concerns about defined contribution pension schemes, which are becoming the norm in the private sector given the decline in so-called final salary packages.
According to the Commission’s research, almost three quarters of workers will be unable to live “adequately” when they retire, with the UK’s complicated pension system to blame, alongside a lack of sufficient savings.
“People need to get more bang for their buck, or they’re not going to bother with a pension,” said Lord McFall of Alcluith, the former Treasury Select Committee chair who led the Wric (pictured). The Commission said that the UK government should plan for an increase to the contribution floor, which is due for review in 2017.
The Confederation of British Industry (CBI) welcomed the report’s stance on encouraging savings for retirement, but advocated sticking to measures already in place, instead of the increase to the minimum pension contribution that the Wrics report suggested.
“The commission’s proposal to consider increasing the minimum compulsory pension contribution in 2017 is not the right answer,” said CBI director for employment Neil Carberry.
“The current plan to introduce a floor of eight per cent saving from next year remains the best way to ensure more people who can afford to save do so.”