One in three working-age adults live in families with accessible savings of less than £1,000.
The next decade of workplace pensions saving should be more flexible and help low earners to build up a savings safety net that they can draw on before they retire, according to a think tank. The Resolution Foundation said more focus is needed on addressing the different challenges faced by low, middle and higher earners.
However, it said the additional funds from this next phase of rising contribution rates should go into an easy-access “sidecar” savings account, with any balance more than £1,000 then flowing into an employee’s pension. The proposed saving boost and added flexibility would help low earners balance building up their rainy day savings while maintaining their current rate of pension saving - and also help higher earners, who are more likely to already have savings, to further boost their pension pots, the report argued.
“And so the new Government’s Pensions Review, which could set policy for the next decade, should focus on tackling the different savings challenges that low, middle and higher earners face. “More than 15 million pension savers could benefit from our new Pension Schemes Bill, with the potential for an average earner to have £11,000 more in their defined contribution pot by retirement when saving over a career.”
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