Brits issued pension warning as expert says 'major' shortfall must be addressed

Many Britons are not saving up enough in their pensions, an expert has said, urging the next Government to act on the issue.

Mike Ambery, retirement savings director at Standard Life, part of Phoenix Group, said the pensions auto enrolment scheme needs to be expanded to make sure people mare saving up enough for their retirement.

He told Express.co.uk: "There's a major under-saving issue in the UK, and it’s vital that we extend auto-enrolment into workplace pension schemes to help people secure a decent standard of living in later life.

"Last year, Parliament passed a bill to lower the minimum age to qualify for auto-enrolment from 22 to 18 and abolish the lower earnings limit for contributions.

"However, we don’t currently have a firm timescale for this to be implemented and it will be up to the next parliament to ensure the current commitment of extending auto-enrolment in the ‘mid twenties’ is followed through."

He said the next Government should also increase the minimum auto-enrolment contributions level, which is currently set at eight percent.

As a standard, this is made up of the employee contributing five percent of their earnings while the employer pays in three percent.

Mr Ambery said: "We think starting to raise them to 12 percent (maybe in steps), when economic conditions allow, is a good step towards retirement savings adequacy."

The pensions expert called on the new Government that comes to power after the July 4 General Election to hold a review into pensions.

He commented: "We think the next Government should conduct a pensions adequacy review covering both private and state pension systems as soon as possible, to ensure we have an action plan to address the current savings gap.

"Labour’s plans for a pension review could provide welcome focus, and a commitment to unlocking UK pension fund assets and encouraging investment in the UK could, if done in the right way, go some way towards both boosting people’s savings and addressing state affordability."

The Labour Party pledged in its manifesto to "increase investment from pension funds in UK markets".

The document states: "We will adopt reforms to ensure that workplace pension schemes take advantage of consolidation and scale, to deliver better returns for UK savers and greater productive investment for UK PLC.

"We will also undertake a review of the pensions landscape to consider what further steps are needed to improve pension outcomes and increase investment in UK markets."

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