Government needs holistic view of retirement

There is no over-arching programme or single accountability for encouraging people to save for retirement, according to a report by the National Audit Office (NAO).

Its Government interventions to support future retirement income report highlights the significant consequences for the taxpayer as people live longer, spend longer in retirement, and have increasing social and healthcare needs.

While the Treasury leads on overall savings strategy and the Department for Work and Pensions (DWP) on workplace savings, according to the NAO, there is a need for a whole system view. Otherwise, it believes there is a risk that individual, but co-independent interventions, may not be effective in increasing saving for retirement.

The organisation has stated that the existing initiatives to manage this problem, including increasing the future state pension age, the introduction of auto-enrolment and the state pension reforms, face challenges.

It added that the government is working to change employers’ attitudes towards older workers and has broken down some of the barriers to a longer working life by abolishing the default retirement age, but it does not have a formal published strategy to influence employers.

The report also found that the success of encouraging saving for retirement through auto-enrolment also depends on the responses of individuals, pension providers and employers, in particular on the proportion of employees who remain with the schemes.

Amyas Morse, head of the National Audit Office, said: “The government is implementing a range of individual measures to help reduce the future cost for the state of people living longer and not saving enough for their retirement.

“But these measures are being managed by a variety of departments and public bodies and there is not enough coherence and accountability.

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“What is needed is for the government to take a more holistic view of its portfolio of interventions, how they interact, and their relative costs and benefits.

“It should be more active and effective in influencing citizens to save more and plan more effectively for retirement, and in seeking to change the negative attitudes of some employers towards older workers.”