“Retirement Living Standards” published to help savers picture their future
The standards are pitched at three levels – minimum, moderate and comfortable – based on a basket of goods and services, from food and drink to holidays.
The minimum standard assumes a single person would need an annual income of around £10,000 or £15,000 for a couple.
Someone with moderate retirement plans would need an income of about £20,000 as a single person or £30,000 as a couple. The benchmark for a comfortable retirement income is £30,000 per year for individuals and £45,000 for couples.
PLSA research shows 51 per cent of people focus on their current needs and wants at the expense of providing for the future and only 23 per cent of people are confident they know how much they need to save. The standards aim to help savers overcome this challenge and give them more confidence about their retirement saving.
The PLSA’s ambition is for the Retirement Living Standards to become a widely adopted industry standard.
The standards cover a range of goods and services that are relevant for the majority of people. Currently most people when they reach retirement do not have mortgage, rent or social care costs. These and other costs such as tax on pension income may need to be added depending on individuals’ circumstances.
Nigel Peaple, PLSA director of policy and research, said: “The Retirement Living Standards will support better saver engagement. They distil robust, in-depth research with the public into an easy to understand basket of goods that helps people picture the future – and relatable figures that can provide a powerful and practical tool for encouraging engagement with saving.
“A recent PLSA survey showed 76 per cent of people with a workplace pension agree that Retirement Living Standards would help them know if they were on track for the lifestyle they want in retirement.”
Jamie Jenkins, head of global savings policy at Standard Life Aberdeen, said: “These new Retirement Living Standards are a welcome addition to the current revolution we’re seeing in pension saving.
“Changes to State Pensions have made it easier for people to understand what they’ll get from the government, while automatic enrolment has ensured that most employees are also saving into a workplace pension. Finally, announced just this week in the Queen’s Speech, legislative action to pave the way for pension dashboards will ensure people can see what they have saved away. These new Standards will collectively help people understand exactly what they need to better prepare for the future and help to build greater engagement with life savings.”