Abrdn, a leading City investment firm, has issued a stark warning, urging the government to double the minimum contribution rate in pension pots to avert a looming retirement crisis.
Currently set at 8 percent of a worker’s salary, the firm argues that this increase is imperative to ensure Britons have adequate financial resources in later life.
Stephen Bird, CEO of Abrdn, emphasizes the urgency of this measure, describing it as a critical step towards fostering a robust savings culture in Britain. He warns of the prospect of millions facing financial hardship in retirement, particularly as the state pension age rises and government support for the elderly diminishes.
Bird advocates for a paradigm shift towards a “savings ladder” mentality, encouraging individuals to prioritize long-term financial security over short-term property ownership goals. He points out a concerning trend where the allure of the property market has overshadowed the importance of pension savings.
A survey conducted by Opinium underscores this sentiment, revealing that only a minority of UK adults view pensions as a superior investment strategy compared to property.
Abrdn’s call to action is part of a broader manifesto aimed at nurturing a healthier savings culture in Britain. In addition to doubling the minimum pension contribution rate, the firm proposes measures such as intensifying the government’s advertising campaign for the upcoming NatWest share sale, enhancing financial literacy, simplifying the Isa system, and abolishing stamp duty taxes on UK shares and investment trusts.
The firm’s recommendations underscore the pressing need for proactive measures to address the looming retirement crisis and empower individuals to secure their financial futures. As the landscape of retirement planning evolves, Abrdn’s manifesto serves as a rallying cry for policymakers and citizens alike to prioritize savings and financial resilience.
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City Investment Firm Calls for Doubling of Minimum Pension Contribution Rate