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Industry Insights
March 28, 2024

Government urged to adopt ‘bold but sensible’ pension reform agenda

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The government has been urged to adopt a "bold but sensible" pension reform agenda, after industry research revealed high levels of public concern over insecurity in retirement caused by climate change and inadequate pension savings.

The research from ShareAction, Make My Money Matter and Finance Innovation Lab found that over three quarters (77 per cent) of savers believe the government should do more to ensure pension holders have additional retirement savings.

In addition to this, nearly two thirds (65 per cent) thought that the government should do more to ensure UK pensions tackle the climate crisis, while three quarters felt that the government should be doing more to ensure pensions invest in the UK economy.

In light of the findings, ShareAction, Make My Money Matter and Finance Innovation Lab have outlined five key pension reforms that could help deliver on this agenda and prevent a national crisis in UK pensions.

The proposed pensions reform strategy, Better pensions for all and a sustainable, productive, economy, is designed to lead to a "step-change" in long-term and green investments, deliver adequate and secure pensions for all UK citizens and boost the productivity and sustainability of the UK economy.

It identifies five key areas of policy action for the government, which are intended to avert damaging impacts on pension holders and the planet and instead ensure pensions tackle the climate crisis, improve retirement security for millions and grow the economy.

In particular, the report emphasised the need to boost pension savings and the state pension, encouraging the government to increase the mandatory minimum level of pension savings to 12 per cent or more, with a 5 per cent contribution from the employee and 7 per cent from the employer.

It also said that the government should ensure that default pension options focus on long-term investments, and support pension funds in driving green investment in the UK by expanding institutions like the UK Infrastructure Bank and developing initiatives that accelerate the take-up of new technologies and aggregate fragmented opportunities.

Commenting on the report, Finance Innovation Lab’s CEO, Jesse Griffiths, said: “With over £3trn in assets, UK pension funds are major investors. But right now, the pensions system is in a shocking state.

“It’s time for the government to act and adopt a bold but sensible reform agenda that can make the pensions system work for savers, the environment, and the economy.”

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