20 Apr UK pension provision half of OECD average
The Investing and Saving Alliance (TISA) has said that Auto-enrolment (AE) contributions must rise to 12 per cent to put the UK on par with the rest of the Organisation for Economic Co-operation and Development (OECD) countries.
Analysis of official data by TISA has revealed that Britons receive the lowest net pension entitlements within the intergovernmental organisation of 36 countries.
In fact, the UK’s mandatory pension provisions are nearly half the OECD average, which means that workers must plan more for retirement to supplement their workplace pension.
The UK net replacement rate, which represents the ratio of pension income to pre-retirement earnings, is currently 28.4 per cent compared with the wider OECD average of 58.6 per cent.
TISA believes that the minimum contribution under the AE system should be 12 per cent, instead of the eight per cent mandated in the workplace pension rules.
Head of Retirement at TISA, Renny Biggins, said: “If the UK is to continue its progression to offer a truly world-class pension system, other than making further enhancements to the state pension – we need to increase AE contribution levels to enable us to compare more favourably with our international peers.”
TISA is officially supporting calls for a second official review of AE by the Department for Work and Pensions (DWP) in light of these findings.
“We recognise that it can realistically take several years for agreed proposals to make their way into legislation, which is why we call for a second official DWP AE review to take place no later than 2022 and for future statutory reviews to take place periodically,” Renny Biggins added.
“It is a collective Government and industry responsibility to ensure AE remains a success, relevant to a constantly changing backdrop of personal wealth, taxes and working patterns.”