The PLSA will launch its new Retirement Living Standards at its Annual Conference & Exhibition on Thursday 17 October.
Pitched at three levels – minimum, moderate and comfortable – the Retirement Living Standards will empower people to better understand the cost of living in retirement and offer an innovative approach to helping savers engage with their pension.
The Standards are based on independent real research with real people. They describe a basket of goods and services required to reach a living standard – household bills, food and drink, transport, holidays and leisure, clothing and personal, helping others – and establish associated expenditure levels.
They have been designed to act as a practical and meaningful starting point for consumers in engaging with their life in retirement.
The PLSA is calling on the industry to adopt and develop the Standards so that they become a key first step in savers’ pension planning.
The PLSA will encourage the pensions and guidance sector to adopt the Retirement Living Standards and for them to be included on the Government-backed dashboard and Money and Pension Service calculator to help many more people plan effectively for retirement.
The Retirement Living Standards are the culmination of the recommendation in PLSA’s 2018 Hitting the Target report to develop retirement income targets. This recommendation followed extensive consultation with pensions experts and savers to find ways to help people achieve a better income in retirement.
The report was published alongside consumer research, carried out on behalf of the PLSA, which revealed 80% of consumers aren’t confident they’re saving enough for retirement, equating to 30.4 million working age people who risk not being able to afford the lifestyle they want in later life.
The research also found 44% of savers assume the automatic enrolment level has been set to ensure everyone will be comfortable in retirement when in fact it is only to ensure as many as possible have the minimum they need to live off. In addition, PLSA figures show around three quarters of adults do not know how much to save for retirement and a similar percentage believe a set of national retirement income targets would help them save for retirement.
While provisionally named Retirement Income Targets, the name Retirement Living Standards was selected as it better describes the purpose of the initiative in serving as a kind of benchmark for retirement spending. It also rated highly for understanding, clarity of message and engagement in consumer testing.
The PLSA is currently working with a number of pension providers to encourage early adoption of the Retirement Livings Standards to show their members what lifestyle they might have in retirement based on their current pension savings and future contributions.