Living Pension standard launched; Phoenix Group and Aviva among initial signatories

A Living Pension standard has been launched by the Living Wage Foundation, setting a target of at least 12 per cent of a worker’s annual salary to go into pensions saving, of which the employer pays in at least 7 per cent.

The Living Pension savings target can also be implemented as a cash amount of £2,550 a year, based on 12 per cent of a real Living Wage worker’s salary. The employer contributes at least £1,448 to this cash amount.

The Living Pension standard is a voluntary savings target for employers who want to help workers build up a pension pot that will provide enough income to meet basic everyday needs in retirement, after research from the Living Wage foundation revealed that over half (56 per cent) of pension savers feel like they’ll never be able to retire.

It was independently calculated by the Resolution Foundation, and was developed with guidance from the Living Pension Steering Group, made up of industry bodies, employers and union representatives, and received financial support from Abrdn Financial Fairness Trust.

Six employers were listed as initial signatories of the Living Pension: Phoenix Group; Herbert Smith Freehills; Aviva; Good Things Foundation; Wealthify; and Citizens UK.

The Living Pension accreditation is open to all accredited Living Wage Employers. To meet the standard, the Living Pension must apply to all directly employed staff (regardless of age and earnings) and, over time, third-party contracted staff within scope of the Living Wage.

As well as making the minimum savings level available for existing employees, all new employees should automatically be enrolled on the Living Pension. As part of the accreditation, employers must also agree to provide an annual communication on the Living Pension to all employees, and a template will be provided to support this.

Commenting on the launch, Living Wage Foundation director, Katherine Chapman, said: “Over the past 10 years the Living Wage campaign has grown in strength and numbers.

"Now paid by over 12,000 employers, it delivers essential pay rises to over 450,000 workers every year. The Living Pension builds on this by encouraging employers to do more to help their workers build a pension pot that meets basic everyday needs in retirement, providing stability and security for workers now and in the future.”

The initial signatories urged other companies to also achieve Living Pension accreditation.

Standard Life, part of Phoenix Group, chief executive, Andy Curran, said: “It’s critical that people are saving enough towards their retirement, and we know that employers have an important role to play in ensuring that the right foundations are laid for their employees’ retirement.

“Phoenix Group is proud to be one of the first employers in the UK to sign up to the Living Pension accreditation which is a really good initiative. We urge other businesses, who can, to also sign up to help ensure everyone can have enough income to meet their everyday needs in later life.”

Aviva chief people officer, Danny Harmer, added: “By adopting the Living Pension and paying the Living Wage, organisations can help their people balance saving for tomorrow with living for today.

"Aviva is proud to be one of the first companies to offer the Living Pension to our people. We are encouraging our clients to do the same, so that more employees can have a decent standard of living when they retire.”

The Living Pensions standard also received a positive response from the broader industry.

Pensions and Lifetime Savings Association (PLSA) director of policy and advocacy, Nigel Peaple, commented: “I am very pleased to support the Living Pension, which seeks to encourage better pensions and higher employer contributions, especially for employees on a modest income.

"The new initiative, alongside existing measures like the Retirement Living Standards and the Pensions Quality Mark, helps employers and employees identify good provision.”

Adding to this, Isio director, and member of the Living Pensions Steer Group, Paul Moffat, described the Living Pension as “a milestone moment for our industry”.

“With more than 16 million workers not currently saving enough to meet the cost of living beyond their working lives, without an intervention like this, many will unknowingly be forced into poverty when they retire,” he said.

“The Living Pension represents a step in the right direction, improving the lon- term financial wellbeing of employees, particularly the lowest paid, and has been designed in a pragmatic, easy to implement way that promotes fairness and transparency. The standard should be a cornerstone of benefit design for organisations who are passionate about inclusion.”

However, People’s Partnership director of policy, Phil Brown, stated support for the initiative, but also said that “multiple adequacy measures could be confusing for savers. We believe there should be an industry standard agreed, bringing together the fantastic work of organisations like the Living Wage Foundation and the PLSA”.

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