Can low paid workers afford to retire in today’s world?
With people now expected to live 20 years plus in retirement, many are reliant on retirement savings for the equivalent of 50% of their working life – how can we, as employers, support them in saving enough?
One fifth of today’s pensioners are living in relative poverty, this is despite the state pension and the historic provision of “gold-plated” defined benefit pensions. As much of the public and private sector move towards defined contribution pension provision, employees must answer the question “how much do I need to be saving”?
Supporting our colleagues’ financial wellbeing can be just as important as supporting their physical and mental wellbeing, supporting their retirement needs is part of this.
Auto-enrolment has led to thousands more saving towards their retirement but are people saving enough? And with more people reducing or opting out of pension savings during the cost-of-living crisis, it begs the question will the lowest paid workers be able to afford retirement?
Research by the Resolution Foundation has looked at the private pension income needed to fill the gap between the state pension and a minimum adequate standard of living. Their research found that 4 in 5 workers were not saving sufficiently to meet this level and less than 1 in 20 low paid workers is on track to meet the required income.
A new benchmark “The Living Pension” seeks to address this issue by setting cash and percentage contributions designed to make sure an employee earning the Real Living Wage can save enough to afford an acceptable standard of living in retirement.