Stark pensions warning for Labour’s Rachel Reeves as pensions bill misses ‘key issue’
An expert has warned the policies 'won't be much help' to pensioners if this vital issue is not addressed
The pensions bill put forward by Labour risks overlooking a key issue when it comes to retirement savings.
The King's Speech setting out the new Government's priorities included a surprise pensions bill, which will work to open up pension investments.
But Richard Parkin, head of Retirement at BNY Investments, said the draft legislation overlooks a key problem for pension savers.
He said: "The key issue for UK pensions is that of adequacy. Improving investment and reducing costs is helpful but if there’s not enough being saved in the first place, they aren’t much help.
"We need a plan for how we’re going to increase pension contributions from their current levels."
He admitted that it "never is" a good time to ask people to increase their pension contributions but this needs to be a priority.
Mr Parkin explained: "If we increase contributions gradually, and share that between employees and employers, then we can deliver better outcomes at retirement without too much pain today."
Upcoming changes that could help with this include the expansion of auto enrolment, which has been legislated but has yet to come about.
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The scheme is set to be opened up so anyone aged 18 and over is auto enrolled, rather than only those aged 22 and over.
You also currently have to earn above £6,240 to be auto enrolled, but this is being expanded to all earnings.
Mr Parkin added: "Another key change is to improve how much help people can get without having to take full financial advice.
"This will allow pension providers to guide their members towards better choices up to and at retirement.
"Some good work has already been done by the Treasury and the Financial Conduct Authority here, but it needs to be progressed quickly to make sure people are making the most of their retirement savings."
People planning for their retirement may also want to check how much state pension they are entitled to, which can be done using the state pension forecast tool on the Government website.
The full new state pension is currently £221.20 a week.
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