Call for workers to increase pension pot contributions

The report, which follows a two-year study, said a national savings target of 15% of lifetime earnings should be adopted “to avoid future pensioner poverty”.

The findings were published by the Independent Review of Retirement Income (IRRI), which was set up in 2014 by Labour to review the pensions market. It is chaired by Professor David Blake, director of the Pensions Institute at Cass Business School.

Under automatic enrolment into workplace pension schemes, the minimum contribution as a percentage of earnings is currently set at 2%, including contributions from workers, employers and tax relief. The minimum contributions level will increase to 8% in the coming years.

Minimum contributions are being escalated over time, to help people get into the habit of paying into a pension initially. So far, around nine in 10 people are staying in the workplace pension they have been placed into under auto enrolment, which started in 2012.

The report also recommended the Government should set up an independent pensions, care and savings commission, reporting to Parliament, to ensure there is cross-party consensus for future pension reforms.

In another key recommendation, the report said a “safe harbour retirement income plan” should be introduced, to help people take out the most dependable retirement income products for their personal needs.

“Middle Britain” - those with pension assets between £30,000 and £100,000 - should be recommended to use a retirement income plan that involves a simple and limited set of pathways, the report said.