Source · Select Committees · Work and Pensions Committee
Recommendation 3
3
Acknowledged
Although there are two commonly used measures of adequacy, there is currently no consensus in...
Recommendation
Although there are two commonly used measures of adequacy, there is currently no consensus in support of a single definition or what target the system should aim to achieve. We heard that building a new consensus on this—involving employers, trade unions, politicians, the wider public and the pensions industry—would be essential to gaining support for any reforms to address the problem of under-saving. We recommend that, by March 2023, the Government should set out its plans to build a new consensus on what an adequate income in retirement is and what the pensions system should be designed to achieve. (Paragraph 27) The 2017 review
Government Response Summary
The government is committed to carrying out further analysis to measure the adequacy of retirement incomes for current savers, and believes a collection of measures, based on different methodology, provides a greater range of insight, than a single measure alone.
Government Response
Acknowledged
HM Government
Acknowledged
Income in retirement is a very important issue that is a key priority for the government. We are committed to carrying out further analysis to measure the adequacy of retirement incomes for current savers. DWP, and parts of the pensions industry, do use various measures to review and assess actual and projected pensioner incomes. Taken together, these provide a helpful indicator of how the system is operating. We provided our last report of undersaving as measured against the Target Replacement Rates (TRR) in the Automatic Enrolment Review 2017. As promised in our letter to the Chair of 26 August, we will provide an update of our analysis as soon as the data is available. We consider that a collection of measures, based on different methodology, provides a greater range of insight, than a single measure alone. This is because for individual savers, ‘adequacy’ is a highly personal judgement - what might seem adequate for some may feel inadequate for others. Establishing a personally acceptable level of provision for retirement involves personal planning, and goes wider than just the pensions system, other forms of wealth will also be relevant. There are a number of ‘adequacy’ measures available to savers including the Pension Commission’s Target Replacement Rates (TRR), the Joseph Roundtree Foundations Minimum Income Standard (MIS) and the more recent Pensions and Lifetime Saving