When it comes to pensions, the message is clear: we need to be saving more. Which is why it's so welcome to hear a renewed focus on encouraging retirement saving, and a call for the Pensions Dashboard to be quickly delivered. But how can it help you reach your goals?
Data shows that 78% of those aged 18 to 64 aren't sure or don't know where to look to see if they're on track with their retirement savings, which is why the Pensions and Lifetime Savings Association (PLSA) has launched a new consultation designed to help people plan for and meet their retirement goals.
The consultation (Hitting the Target – Delivering Better Retirement Outcomes) is hoping to spearhead the development of a set of national retirement income targets, which will help savers identify how much they actually need to save for retirement to ensure they have the lifestyle they want.
As it stands, only 16% said they know how much they need to achieve the standard of living they hope for in retirement – 77% said they had no idea how much they'd need in later life – with just 22% knowing where to go for this information. This is where national Retirement Income Targets could come in.
These targets will "provide savers with tangible income goals which take into account what they need to save in order to achieve different standards of living in retirement," essentially giving an accepted and understood target for retirement income. Given that 80% of respondents said that such a target would help them plan for later life, it's an idea that could pay off.
Graham Vidler, director of External Affairs at the PLSA, said that "retirement planning is confusing for most of us," and believes that a set of Retirement Income Targets could benefit savers by providing "a nationally recognised standard that people can work to achieve over their working lives," empowering them by providing tangible, and hopefully achievable, targets.
The PLSA is currently consulting on how it can do that, and it could well pay off – research from Old Mutual Wealth shows that those with a retirement income target end up with an average annual income of £25,000, compared with £17,500 for those that didn't set a goal, so encouraging more people to set such goals could be hugely beneficial. But that's not all being developed to help you have a comfortable standard of living in retirement.
Also announced this week has been a renewed call for the proposed Pensions Dashboard to be delivered, with the Association of British Insurers publishing a list of demands and calling for the initiative to be implemented by 2019. But how could it help you?
Well, the proposed dashboard would bring together data about all your pension pots in one place, something that could be particularly beneficial given that you may have accumulated several different pots over the course of your working life. Being able to see them together could help you keep track of them and better prepare for retirement, as it'll be easier to see their performance and whether you're likely to achieve your retirement goals.
"Pension Dashboards will not only generate interest in pensions, they also have the potential to transform pension saving," commented Kate Smith, head of Pensions at Aegon. "Providing a clear view of all their pension pots at a glance saves time and effort, and makes advice more affordable. With savers having lost track of £400 million worth of pensions, there's a clear need for one … the Government needs to support this initiative."
Both of these developments could help ensure you reach your goals, but there's only one sure-fire way to boost your chances, and that's by saving as much as you can from as early as possible in your working life.
This means you need to snap up the chance of saving into a workplace pension
– if you haven't been automatically enrolled yet, you should be soon – and you may want to consider other savings vehicles as well, such as ISAs. The new Lifetime ISA could also be worth considering for those specifically saving for their pension and/or a first home, but however you go about it, make sure to get saving and you'll be one step closer to reaching your goals.