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  • September 2017
09

Work-based pensions hit record high

Open-access content Monday 25th September 2017 — updated 5.50pm, Wednesday 29th April 2020

The number of work-based pension policies in the UK increased by 11% to 7.5 million in 2016, according to new figures from the Association of British Insurers (ABI).

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This is the highest amount on record, with the increase partly attributed to the introduction of automatic-enrolment (AE) under the Pensions Act 2008.

It was also found that premium income was at an all-time high last year, increasing by just over 11% on the previous year to £13.4bn.

"The success of AE shows how the power of policy can benefit society in the long-term," ABI director, Yvonne Braun, said.

"Our industry constantly adapts and evolves its long-standing products to meet our customers' changing needs."

The ABI said the rise in number of pension pots with different providers increased the need for a dashboard-style service so people can overview all their pension savings online.

It argues the technology to support this is near completion, but a regulatory framework and government legislation are required before it can be rolled out to the public.

In addition, it says the government must do more to ensure everyone benefits from AE, with its figures showing the majority of savers will not have enough in retirement, despite contribution rises to 8% in 2019.

"We cannot let our guard down now, and urge the government to widen the AE net to help even more people start saving now for their future," Braun added.

This comes after the Institute and Faculty of Actuaries (IFoA) urged the Department for Work and Pensions to make adequacy of retirement savings the main focus of its automatic enrolment review.

The department is set to publish a report setting out policy recommendations towards the end of the year, with the IFoA arguing that employers should be pushed to reward saving over the minimum contribution rate.

It also suggests that a method of auto-escalation could be introduced, and recommends the removal of the earnings trigger for when maximum contributions are payable.

"The IFoA has first-hand knowledge of the impact of AE pensions, and of the wider issues surrounding pensions adequacy in the UK," former IFoA president, Colin Wilson, said.

"We call upon the government to do everything they can to ensure that everyone who retires in the UK does so with adequate provision for their old age."


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This article appeared in our September 2017 issue of The Actuary.
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