Why building a solid foundation with a Living Pension matters
Everyone should be able to afford to live with dignity in retirement. But with an ageing society, millions in the UK will end up in pension poverty, struggling to make ends meet when they retire.
The Resolution Foundation’s Living Pensions (2022) research found four in five workers in defined contribution pension schemes are not saving enough for an acceptable standard of living in retirement. Today’s living cost crisis is tomorrow’s pensions crisis.
The latest Living Wage Foundation research, Worth the wait: How the Living Pension can support workers and businesses, on worker attitudes towards workplace pensions shows that 32% of those polled expect to work beyond retirement age, including 10% who never expect to retire.
The Living Pension accreditation offers a solution. It provides an annual savings target for Living Wage Employers to give workers financial security now and in the future. It's based on an annual savings benchmark of £3,150, which equates to 12% of a full-time Living Wage salary – of which £1,840 (7%) comes from the employer.
Building on the success of the Living Wage, the Living Pension sets an annual pensions savings target that employers can have confidence in, making it easier to do the right thing by their employees. The benchmark was developed by calculating the income needed for a decent standard of living in retirement, then working backwards to identify the pension pot and annual savings required to achieve it alongside a full State Pension. This results in an annual savings target of £3,150, equivalent to 12% of a full-time Living Wage salary, of which £1,840 (7%) comes from the employer.
What influences employers’ pension contribution rates?
To better understand what influences employers when setting workplace pension contribution rates, Abi Rose, research manager at the Living Wage Foundation, is looking for employers to take part in a short online interview.
The interview will explore the factors that shape pension policy decisions, how approaches differ across sectors and organisation sizes, and employers' views on potential future reforms. Findings will be anonymised and published in January 2027.
If you'd like an opportunity to share your organisation's experiences and approach, or would like to find out more about this project, please email Abigail Rose.
