Lizzy Holliday
Head of DC, Master Trusts and Lifetime Saving, Pension and Lifetime Saving Association
A survey carried out by the Pensions and Lifetime Savings Association (PLSA) back In 2018 found that only 23% of people are confident they know how much they need to save for retirement.
When you add that 51% of people focus only on their current needs and wants, you get a fair picture of the difficulties and potential shortfalls we could all face in the future.
Pensions have rarely been an exciting dinner table talking point. That said, it is vital we increase our efforts as a nation to get to grips with our retirement plans.
Our surveys in 2018 found that 73% of participants believed that targets would make it easier to plan for retirement.
So we set about creating PLSA’s Retirement Living Standards.
What are Retirement Living Standards?
The standards aim to help people to picture their future and to provide a robust yet simple rule of thumb.
The Standards are set at three specific levels – minimum, moderate and comfortable – to simplify a spectrum of possibilities.
We are committed to encouraging further adoption of the Standards in a bid to reach even more savers to help them picture their future.
Developed in partnership with independent researchers at Loughborough University, each level features a detailed basket of common goods and services – including household bills and maintenance, clothing, transport – to make future lifestyles tangible now.
The Standards also provide the specific annual costs of these baskets – to serve as a general benchmark or rule of thumb, as well as a starting point for more personalised planning and goal setting. These can be abbreviated as 10k-20k-30k for a single person, or 15k-30K-£45K for a couple.
Is now the right time to be thinking about pension savings?
For some, at the moment, saving and planning might be particularly challenging. COVID-19 has not impacted everyone in the same way – some have more disposable income, while others are unfortunately in more difficult positions.
The Retirement Living Standards can provide a practical benchmark for all. Picturing and quantifying the outcome you want from your pension saving is key to informing financial decisions you need to make now. Plans might need adjusting, but keep your end goal in sight, and understand the impacts on that goal.
What are the future plans for the Standards?
To ensure the Standards become a nationally used frame of reference, it is vital that pension schemes, advisers, consumer bodies and government bodies all make use of the standards.
Schemes are already using the Standards in their saver communications, making them available to more than 8.5 million people across the UK, as well as developing tools to make them more personal to their savers.
We will be updating the Standards each year, and developing additional support for adopters – including sharing case studies, further ‘scenarios’ for specific scheme membership profiles, and additional rules of thumb.
We are committed to encouraging further adoption of the Standards in a bid to reach even more savers to help them picture their future.