Pension targets could help achieve 'decent retirement', says new report

Only one in six know how much they'll need to achieve a desired standard of living

80 per cent of people said a national retirement income target would help them plan for retirement (PA)

Pension savers could be set targets to help them work out more easily whether they are on track for a decent retirement income, a report proposes.

The Pensions and Lifetime Savings Association (PLSA) said previous research it has carried out suggests 13.6 million workers are at a high risk of failing to achieve an adequate retirement income.

The body, whose members include over 1,300 pension schemes, has launched a consultation proposing national retirement income targets.

A survey of 1,600 adults aged up to state pension age found only one in six (16 per cent) believe they know much they would need to achieve the standard of living they hope for in retirement.

Some 78 per cent of people aged 18 to 64 years old were not sure or did not know where to look to tell if they were on track with their retirement savings.

Four out of five (80 per cent) people said a national retirement income target would help them plan for retirement.

The suggestion could build on automatic enrolment, which was launched in 2012 to get people into the retirement savings habit.

The PLSA said national retirement income targets are used in Australia and can provide savers with income goals showing how they can achieve different standards of living in retirement - such as a minimum, modest and comfortable income.

The PLSA said, as part of the consultation, it will look at what exact income levels could be needed.

In its initial research, the general response among people aged between 55 and 64 years old suggested that for a single person they might be £10,000 to less than £15,000 for a minimum standard of living, £15,000 to £25,000 for a modest standard and more than £25,000 for a comfortable standard.

Graham Vidler, director of external affairs at the PLSA, said: "We all know we need to save for retirement but few of us know how much we might need to live on or whether we are on track to hit that target."

The PLSA is inviting responses by January 12 2018.

Tom McPhail, head of policy at Hargreaves Lansdown, said the proposal to target an income based on the idea of a minimum, modest and comfortable retirement may well work for investors, and could be incorporated into retirement income calculators.

Mr McPhail said: "The traditional guarantees from pension schemes and insurance companies have been stripped away in exchange for freedom, choice and personal responsibility."

PA