11 million people are at risk of poverty in their old age, according to a new report from think tank The Policy Exchange.
The report, published today, calls for urgent action from the government on the lack of pension saving in the UK. It claims that British people need to save more than six times the amount they currently are, in order to avoid poverty in retirement.
The Policy Exchange recommended that the government should make it compulsory to save for retirement, similarly to the way we pay taxes. The report suggests a new scheme which it calls “Help to Save”, to replace the opt-out system in the newly introduced auto-enrolment.
Another key recommendation of the report was that the government should automatically increase an individual’s pension contributions as their income rises.
James Barty, the report’s author, warned that a lack of retirement saving was putting an “intolerable burden on the state”, which “needs to be addressed sooner rather than later”. He went on to add:
“With an ageing population, putting money aside for later life should be seen in the same context as National Insurance contributions, taxes and even education - an obligation that falls on everyone in society.
“Help to Save' will prevent the state from having to pick up the tab for people who haven't put aside enough money for later life.”
In response to the recommendations, a spokesperson for the Department for Work and Pensions said the fact that 90% of people had chosen to opt into auto-enrolment shows that people “clearly” value the chance to save for retirement. He went on to emphasise the importance of individual choice:
“Pension saving is not right for everyone, however, so they have the right to leave pension saving at any time. If they do leave, they will be enrolled again every three years so they can think again about whether it is right for them.”