Labour looks set to win the next general election by a landslide, but as we used to say in non-politically correct days: 'It ain't over till the fat lady sings'.
Indeed, with Wimbledon on the horizon, nothing is certain until the last point of the match is played.
But if Labour forms the next government and starts its promised pension review, my fundamental question for its assembled bigwigs is how best to improve financial resilience, both for today and tomorrow?
Can anyone in financial services or indeed government square the circle of helping today’s cash-strapped workers with the need to provide more for their tomorrows?
My answer is to increase auto-enrolment pensions contributions for all and at the same time introduce an element of flexi access. Pension products are just too illiquid for the modern world. They need a touch of a spice.
Around one in five people in the UK has less than £100 in savings according to Royal London's financial resilience 2024 report. Unexpected financial emergencies, from losing your job, a broken gas boiler or even buying new school uniforms could tip anyone over the edge.
Indeed, it is not just the precariat who struggle. Today, with sky-high interest rates, advisers find some of their clients are struggling, even on salaries of £100,000 with big mortgages and school fees to finance.
And their clients’ children and grandchildren sometimes don't have enough cash left over to get the savings habit – even opening a cash Isa is beyond them.
But there is hope. A total of around 20mn people save into workplace pensions provided by 2.3mn employers. A better pension with an element of flexibility could transform so many lives today and tomorrow.
Inadequate contributions
First things first. A quick win for the incoming government would be to simply implement the AE changes recommended in the 2017 review, seven years ago.
Indeed in 2023 the Pensions (Extension of Automatic Enrolment) Act 2023 gave the secretary of state power to reduce the lower age limit for AE and to remove the lower earnings Limit for qualifying earnings. These modest reforms have yet to be implemented. It has been a long wait.
Of even greater concern, 12.5mn people are under-saving for retirement, according to Department for Work and Pensions research; the legal minimum for AE contributions is still a miserly 8 per cent of qualifying earnings.
This figure, set more than a decade ago in 2012 and unchanged in 14 years, will not provide anyone a comfortable living standard in retirement or even £31,000 a year, a moderate pension in the eyes of trade body PLSA.
By law, employers currently contribute just a minimum 3 per cent of salary while employees pay 5 per cent (including tax relief). According to Nest, four in 10 employers offer no more than the minimum 3 per cent.
A further two in 10 employees work for an employer that pays the minimum legal pension contribution for some but not all employees.
