The government is facing calls from leading City experts to row back on some of George Osborne's landmark pension reforms by forcing Britons to set saving targets.
A top pensions lobby group will today call for the introduction of National Retirement Income Targets (RITs), a successful initiative used in Australia that helps people plan to save for later life.
One expert said "intervention [is] needed to reset the whole framework for investors".
Osborne championed pension freedoms while acting as chancellor. Launched in April 2015, the changes gave Britons greater control in how they saved for later years.
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Shake-up
The Pensions and Lifetime Savings Association (PLSA) today launches a consultation on how Britons will pay for their retirement going forward. It has questioned whether there is a need for a shake-up of pension contributions, auto-enrolment and retirement ages.
Research by the PLSA found 78 per cent of 18 to 64-year-olds had no clue whether they had saved enough for their retirement.
Tom McPhail, one of the City's top voices on pensions and Hargreaves Lansdown's head of policy welcomed the consultation.
"The key intervention needed to reset the whole framework for investors is for the government to champion a clear policy around promoting saving and investing," he said.
"No one in government, no department and no policy has anything to say about wanting to create a nation of savers and investors.
We are in a new post-paternalistic paradigm for pensions and savings where the traditional guarantees from pension schemes and insurance companies have been stripped away in exchange for freedom, choice and personal responsibility; the government needs to respond to this and to focus on how we can engage people with their financial needs.
A spokesperson for the department of work and pensions said: "Our pension reforms are encouraging saving and making it simpler and easier than ever before to plan for later life.”
“With more than 8.7m people enrolled into a workplace pension it’s clear that automatic enrolment is creating a nation of savers, and our Review is looking at how to build upon its success and help individuals to plan ahead and save towards a more secure retirement.”
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Difficult questions
PLSA director of external affairs Graham Vidler said: “We all know we need to save for retirement but few of us know how much we might need to live on or whether we are on track to hit that target. The PLSA will be consulting widely to understand how the industry and government can help people build and reach a retirement plan
“As part of this, we are asking difficult questions which need to be answered to help more people make the right choices around retirement. We are also looking to develop a new set of Retirement Income Targets that will empower savers by providing tangible targets for them to achieve. We look forward to working closely with stakeholders to build a retirement savings market which is truly focused on the end users – savers.”
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