Top City firms pledge to hike contributions to employees’ pensions pots amid concerns over looming savings crunch
A coalition of top City firms today vowed to boost the contributions they make into their employees’ pensions in response to growing concerns about the potential for a looming savings crunch.
Aviva, Phoenix and Herbert Smith Freehills all pledged to give pensions contributions equivalent to at least seven per cent of their workers’ salaries in a bid to ensure their staff are saving enough for retirement.
In signing up to the ‘Living Pensions’ initiative, the firms will give more than twice as much as they are currently required to under the UK’s auto-enrolment rules.
The UK’s auto-enrolment rules state that companies must give pensions contributions equivalent to three per cent of their workers’ salaries to all staff earning more than £10,000 a year.
The Living Wage Foundation’s initiative is set to see the firms that signed up contribute sums of at least £1,448 a year to all of their employees’ pensions pots.
Andy Curran, the chief executive of Phoenix Group’s Standard Life business, said: “it’s critical that people are saving enough towards their retirement” as he urged other firms to sign up.
The campaign group’s decision to launch its pensions initiative comes off the back of concerns the vast majority of low-paid workers are not currently saving enough to retire on, and that the UK’s cost-of-living crisis might be making the situation worse.
Herbert Smith Freehills’ executive partner Allison Brown said: “The cost-of-living crisis has highlighted the stark difficulties faced by far too many individuals who struggle to manage financially on a daily basis.”
The launch comes after research from the Resolution Foundation shows 95 per cent of low-paid workers are not saving enough to make ends meet during retirement.
Longer lives and higher living costs threaten to stretch workers’ pensions savings in a situation that could develop into a major crisis made worse by the UK’s aging population.
The Living Wage Foundation’s own research also shows nine per cent of pensions savers have started cutting their contributions over the past six months, due the struggle to deal with the rising cost of living.
A further eight per cent of pensions savers also plan to cut their contributions over the next six months, the campaign group’s research shows.