The Pensions and Lifetime Savings Association has said it will publish revised national retirement income targets in early February.
Speaking at the inaugural Pensions Age Great Western Conference, PLSA policy lead: engagement, EU and regulation, James Walsh highlighted the need for a “safer retirement … and to give people something to aim at” when saving for their pension.
The PLSA has based its retirement income targets on the Australian model, which has three categories with different retirement annual incomes: comfortable retirement (AUS $43,695), modest retirement (AUS $24,270) and age pension (AUS $21,164).
Loughborough University is helping the PLSA with a consultation on the planned retirement income targets and calculating a UK equivalent of the Australian method.
Each of the Australian categories has an income target and, within each income target, the consumer is presented with what they can expect to be able to afford in retirement.
For example, in Australia, someone in the 'comfortable income' category should be able to afford bottled wine, one annual holiday in Australia and be able to regularly eat out at restaurants.
In comparison, an individual in the 'age pension' category would expect to be able to afford homebrew beer or no alcohol at all, very short breaks or day trips in their own city and inexpensive takeaways.
Walsh said: “The genius of this is it gives you a target to decide 'that's what I'm going to pay for'. So we thought, why don't we adopt this kind of idea in the UK?”
The PLSA hopes that this will simplify targets for retirees that will allow them to understand what their projected income will provide and, therefore, help them make better decisions regarding their pension savings.
It could also provide greater security and certainty for individuals in what they can expect from their retired life.
When asking focus groups on what they believed to be important to the success of retirement income targets, PLSA found that people were generally supportive, but they would want it to be kept free from regional variations and independent from the government.
A spokesperson from the Trades Union Congress said: “Retirement income targets have the potential to improve contributions to workplace pensions. They are comparatively straightforward to communicate due to their basis in a basket of goods.”