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| Workers should double their pension savings, says Labour's review | Workers should double their pension savings, says Labour's review |
| (about 3 hours later) | |
| Workers should double the amount they are saving into their occupational pension schemes, a two-year review for the Labour Party has concluded. | Workers should double the amount they are saving into their occupational pension schemes, a two-year review for the Labour Party has concluded. |
| The Independent Review of Retirement Income (IRRI) suggests the target for savings should be 15% of salary. | The Independent Review of Retirement Income (IRRI) suggests the target for savings should be 15% of salary. |
| That is a considerably higher level than has been suggested previously. | That is a considerably higher level than has been suggested previously. |
| At the moment the average worker puts just 4.7% of pay into a pension - with most employers making a further contribution of less than 4%. | At the moment the average worker puts just 4.7% of pay into a pension - with most employers making a further contribution of less than 4%. |
| "To get a decent-sized pension pot for retirement, it is necessary to make adequate pension contributions - something of the order of 15% of pensionable salary," wrote Professor David Blake, director of the Pensions Institute at Cass Business School, in the 588 page report. | "To get a decent-sized pension pot for retirement, it is necessary to make adequate pension contributions - something of the order of 15% of pensionable salary," wrote Professor David Blake, director of the Pensions Institute at Cass Business School, in the 588 page report. |
| 'Shake-up' | 'Shake-up' |
| Industry experts have agreed with his recommendation. | Industry experts have agreed with his recommendation. |
| "I think 15% is spot-on, unfortunately," said Richard Parkin, the head of retirement at Fidelity International. | "I think 15% is spot-on, unfortunately," said Richard Parkin, the head of retirement at Fidelity International. |
| "It's a rule of thumb we would recognise, although it represents a challenge for those on low earnings," he told the BBC. | "It's a rule of thumb we would recognise, although it represents a challenge for those on low earnings," he told the BBC. |
| The review was set up by the Labour Party, following the government's announcement of planned pension freedoms in the 2014 budget. | The review was set up by the Labour Party, following the government's announcement of planned pension freedoms in the 2014 budget. |
| On Tuesday the government confirmed that there will be a review of the state pension age. It will report in May 2017, and will be headed by John Cridland, the former director general of the CBI. | On Tuesday the government confirmed that there will be a review of the state pension age. It will report in May 2017, and will be headed by John Cridland, the former director general of the CBI. |
| The review could mean people joining the workforce today will have to wait until their mid-70s before they retire, experts have warned. | The review could mean people joining the workforce today will have to wait until their mid-70s before they retire, experts have warned. |
| Those under the age of about 55 will be affected by the shake-up, which will consider what the state retirement age should be from April 2028. | Those under the age of about 55 will be affected by the shake-up, which will consider what the state retirement age should be from April 2028. |
| Auto enrolment | |
| Employees taking part in the government's auto enrolment programme will eventually see a theoretical 8% of their salaries going in to a pension. | |
| Employers will be obliged to make a 3% minimum contribution, and workers a 5% contribution. | Employers will be obliged to make a 3% minimum contribution, and workers a 5% contribution. |
| However in practice, most contribution rates will be much lower than 8%, as the first £5824 in salary is ignored, as is anything over £42,385. | |
| This is the so-called "qualifying earnings" rule. | |
| While welcoming most of Professor Blake's conclusions, some industry experts said savings levels needed to be tailored to individual circumstances. | While welcoming most of Professor Blake's conclusions, some industry experts said savings levels needed to be tailored to individual circumstances. |
| Conventional wisdom suggests lower-paid workers need to save a higher proportion of their wages than better-paid workers. | Conventional wisdom suggests lower-paid workers need to save a higher proportion of their wages than better-paid workers. |
| Could you run out of money before you die? | Could you run out of money before you die? |
| Click here to see how much you can take out of your pension, while making sure your money lasts | Click here to see how much you can take out of your pension, while making sure your money lasts |
| 'Force nine gale' | 'Force nine gale' |
| Professor David Blake said too many people did not understand the risks associated with making pension income last. | Professor David Blake said too many people did not understand the risks associated with making pension income last. |
| "It is clear that many of these people will find themselves in the same kind of control as a yachtsman in the middle of the Atlantic in a force nine gale," he said. | "It is clear that many of these people will find themselves in the same kind of control as a yachtsman in the middle of the Atlantic in a force nine gale," he said. |
| As a result he said that pension savers needed more help. | As a result he said that pension savers needed more help. |
| Elsewhere in the report he recommends: | Elsewhere in the report he recommends: |