[UK] Launch of ‘Living Pension Employer’ standard scheme

In the UK, the Living Wage Foundation has introduced a new ‘Living Pension Employer’ standard with the intention of providing low-paid workers with financial security in retirement, Personnel Today reports.

The scheme introduces a voluntary savings target of 12 per cent of a worker’s annual salary, of which the employer contributes 7 per cent. The Living Wage Foundation believes that this figure would help employees build a pension pot that provides enough income to meet basic needs.

The target can also be met via a cash amount of £2,550 a year, based on 12 per cent of the recommended voluntary Living Wage. The employer contributes at least £1,448 to this cash amount.

Employers that have already signed up to the standard reportedly include Aviva, Citizens UK, Good Things Foundation, Herbert Smith Freehills, Phoenix Group and Wealthify.

A survey of more than 3,000 UK adults conducted for the Living Wage Foundation revealed that 55 per cent of pension savers believed they would never be able to retire. While 37 per cent were not confident they are saving enough to provide for their basic needs in retirement.

Two-thirds reportedly stated that they would need to work for several years beyond the state pension age to ensure they had enough money to retire.

Last year, Resolution Foundation research showed 95 per cent of low-paid workers paying into defined benefit pension schemes were not saving at levels likely to achieve a basic standard of living. To meet such a threshold, a worker saving at the auto-enrolment minimum (8 per cent, including a minimum employer contribution of 3 per cent) would need to earn a pre-tax salary of £38,000.

Under automatic enrolment, a Living Wage employee working 37.5 hours per week would reportedly have £1,201 going into their pension each year (with £450 coming from the employer). By contrast, the Living Pension would be £2,550 (with £1,488 coming from the employer).

In order to become a Living Pension accredited employer, organisations must ensure the principles of the scheme are applied to all directly employed staff regardless of age and earnings and, in time, third-party contracted staff. New starters should be automatically enrolled on the scheme, the Living Wage Foundation said.

Living Wage Foundation director Katherine Chapman said, “Low pension saving levels are a long-standing issue and our research shows that workers are worrying about an uncertain future.

“The current cost of living crisis is exacerbating the problem. Struggling to make ends meet as living costs soar, many workers are unable to prioritise pension saving, which risks storing up a future crisis of millions unable to afford even the basics in retirement.

“Over the last 10 years, the Living Wage campaign has grown in strength and numbers. Now paid by over 12,000 employers, it delivers essential pay rises to over 450,000 workers every year. The Living Pension builds on this by encouraging employers to do more to help their workers build a pension pot that meets basic everyday needs in retirement, providing stability and security for workers now and in the future.”

Alison Brown - executive partner at Herbert Smith Freehills - said, “Being a responsible employer is about more than ensuring staff are looked after whilst they work for you; it is about recognising that providing employees with stability and security in retirement is just as important.”

“We are delighted to have supported the Living Wage Foundation in developing the new Living Pension standards and are proud to be one of the first companies in the UK to be accredited as providing our staff with access to a Living Pension.”

Danny Harmer - Aviva's chief people officer - said, “By adopting the Living Pension and paying the Living Wage, organisations can help their people balance saving for tomorrow with living for today. Aviva is proud to be one of the first companies to offer the “Living Pension” to our people and, as the UK’s leading pension provider, we are encouraging our clients to do the same, so that more employees can have a decent standard of living when they retire.”

Source: Personnel Today

(Links and quotes via original reporting)

In the UK, the Living Wage Foundation has introduced a new ‘Living Pension Employer’ standard with the intention of providing low-paid workers with financial security in retirement, Personnel Today reports.

The scheme introduces a voluntary savings target of 12 per cent of a worker’s annual salary, of which the employer contributes 7 per cent. The Living Wage Foundation believes that this figure would help employees build a pension pot that provides enough income to meet basic needs.

The target can also be met via a cash amount of £2,550 a year, based on 12 per cent of the recommended voluntary Living Wage. The employer contributes at least £1,448 to this cash amount.

Employers that have already signed up to the standard reportedly include Aviva, Citizens UK, Good Things Foundation, Herbert Smith Freehills, Phoenix Group and Wealthify.

A survey of more than 3,000 UK adults conducted for the Living Wage Foundation revealed that 55 per cent of pension savers believed they would never be able to retire. While 37 per cent were not confident they are saving enough to provide for their basic needs in retirement.

Two-thirds reportedly stated that they would need to work for several years beyond the state pension age to ensure they had enough money to retire.

Last year, Resolution Foundation research showed 95 per cent of low-paid workers paying into defined benefit pension schemes were not saving at levels likely to achieve a basic standard of living. To meet such a threshold, a worker saving at the auto-enrolment minimum (8 per cent, including a minimum employer contribution of 3 per cent) would need to earn a pre-tax salary of £38,000.

Under automatic enrolment, a Living Wage employee working 37.5 hours per week would reportedly have £1,201 going into their pension each year (with £450 coming from the employer). By contrast, the Living Pension would be £2,550 (with £1,488 coming from the employer).

In order to become a Living Pension accredited employer, organisations must ensure the principles of the scheme are applied to all directly employed staff regardless of age and earnings and, in time, third-party contracted staff. New starters should be automatically enrolled on the scheme, the Living Wage Foundation said.

Living Wage Foundation director Katherine Chapman said, “Low pension saving levels are a long-standing issue and our research shows that workers are worrying about an uncertain future.

“The current cost of living crisis is exacerbating the problem. Struggling to make ends meet as living costs soar, many workers are unable to prioritise pension saving, which risks storing up a future crisis of millions unable to afford even the basics in retirement.

“Over the last 10 years, the Living Wage campaign has grown in strength and numbers. Now paid by over 12,000 employers, it delivers essential pay rises to over 450,000 workers every year. The Living Pension builds on this by encouraging employers to do more to help their workers build a pension pot that meets basic everyday needs in retirement, providing stability and security for workers now and in the future.”

Alison Brown - executive partner at Herbert Smith Freehills - said, “Being a responsible employer is about more than ensuring staff are looked after whilst they work for you; it is about recognising that providing employees with stability and security in retirement is just as important.”

“We are delighted to have supported the Living Wage Foundation in developing the new Living Pension standards and are proud to be one of the first companies in the UK to be accredited as providing our staff with access to a Living Pension.”

Danny Harmer - Aviva's chief people officer - said, “By adopting the Living Pension and paying the Living Wage, organisations can help their people balance saving for tomorrow with living for today. Aviva is proud to be one of the first companies to offer the “Living Pension” to our people and, as the UK’s leading pension provider, we are encouraging our clients to do the same, so that more employees can have a decent standard of living when they retire.”

Source: Personnel Today

(Links and quotes via original reporting)