UK Edition
The Government’s auto-enrolment pension scheme has not done enough to prevent a looming retirement crisis, MPs have warned, with more than 60pc of workers still at risk of having too little to live off in their old age.
A report from the Work and Pensions Committee said urgent action was needed to help address the shortfall in savings, as the rising cost of living leaves people with less to save in their pension pots.
Millions of self-employed workers or over-40s who have had limited time to build up their pension pot through auto-enrolment could retire with too little in their nest eggs as their contributions are too low, the report said.
“The blunt truth is that many employees need to save more but do not realise it,” said Sir Stephen Timms MP, who chairs the committee.
“The Government must urgently consider how to boost saving, including examining the case for increasing minimum contributions, before it is too late.”
Sir Stephen said the government must acknowledge that “the middle of a cost of living crisis is not the time to ask people to pay more into their pensions” and so ministers must instead draw up a plan of action in which reforms could be phased-in.
Earlier this year it emerged that one in ten adults have reduced or halted contributions to deal with the rising cost of living.
Britain’s pension funds were this week at the centre of the financial crisis sparked by the mini-budget forcing the Bank of England to launch a £65 billion emergency bailout.
The Bank warned of a “material risk to UK financial stability” and stepped in to buy long-term gilts, as plunging markets for UK debt sent borrowing costs spiralling and forced pension funds to dump their assets.
However, the move by Governor Andrew Bailey helped restore some calm to markets, and pensions experts said retirement pots were not under threat.
Yesterday it emerged that the Bank of England was warned about a looming disaster in the pensions sector by Next five years before it was forced into an intervention.