A government think thank, Policy Exchange, have urged the government to make it compulsory that people save for their retirement. Their proposal the ‘Help to Save’ Scheme is aimed at avoiding 11 million people ending up in ‘Pension Poverty’. In a BBC article….
James Barty, author of the report, said the lack of people saving for their retirement was putting an “intolerable burden on the state” which “needs to be addressed sooner rather than later”.
He said: “With an ageing population, putting money aside for later life should be seen in the same context as National Insurance contributions, taxes and even education – an obligation that falls on everyone in society.
“‘Help to Save’ will prevent the state from having to pick up the tab for people who haven’t put aside enough money for later life.”
Under the plans, the opt-out in the Government’s auto-enrolment scheme would be removed making it obligatory for people to save for their retirement
Individual pension contributions would also increase as incomes rise over time.
According to the report, someone earning the average wage – £27,000 – will need to save over six and a half times more than they currently do to generate the Government’s recommended retirement income of £16,200.
The average pension pot is estimated to be just £36,800, which on current annuity rates is enough to generate a retirement income of £1,340.
The paper said that an average earner would need a pot of £240,000, assuming they receive the full single tier pension.
Are you saving enough for your retirement? should saving be compulsory?