On 11 July, the IFoA released a new policy paper on adequacy of retirement income.
On 11 July, the IFoA released a new policy paper on adequacy of retirement income. The report was launched at a roundtable event at Staple Inn Hall, London, with attendees from government, industry, think tanks and consumer groups, to discuss how individuals can best be encouraged to save adequately for their retirement.
The paper argues taking a bottom-up approach to assessing adequacy, as individuals will have varied ideas of what an adequate income looks like for them, based on both their current lifestyle and the lifestyle they might aspire to.
This approach would consider an individual's retirement income goals, as opposed to, for example, a proportion of their working life earnings, helping to engage individuals and develop their financial capability by shifting the focus from inputs to outcomes.
Creating a Bronze, Silver and Gold rating system could help individuals to break down their retirement income needs into smaller, more tangible goals. It could also help individuals to consider a range of potential retirement income options that could best help them to turn their savings into an adequate income.
The success of such an approach would be reliant on the availability of communications and tools that help individuals to set goals, monitor their progress towards them and understand what actions they could take to have the best chance of achieving them.
We recommend that government, regulators and the pensions and advice industries work collectively on a communication strategy. This should not be a 'one-size-fits-all' approach, but should be effectively targeted and aimed at improving financial capability.
Read the report at bit.ly/29MbGVF