The Pension and Lifetime Savings Association (PLSA) launched the retirement living standards in October 2019. The standards are designed to help individuals understand the level of income they will need in retirement and the lifestyles that different levels of income will allow them to have. 

The PLSA announced three expenditure levels, representing Minimum, Moderate and Comfortable standards of living in retirement, which can be approximated by the rules of thumb shown in the chart; £10k, £20k and £30k for singles, and 1.5 times those figures for couples. 

We’re now one year on, so what have we learned so far?

More than 14 million savers now have access to the retirement living standards

This success puts adoption well ahead of the PLSA’s target of 90% adoption from active savers by 2025.

A poll conducted by the PLSA suggested that adoption was mainly online (67%), although the standards had also made their way into annual statements (one third) and interactive modellers (19%).

We fully support the integration of the retirement living standards into interactive modellers. This provides an effective means for members to test different retirement approaches on potential living standards that members can relate to. Whilst the first year has been a great success, there is clearly more to do, as an industry, to extend the standards to members in the most useful manner.

Most members are expected to be on track towards their longer-term savings goals

The Hymans Robertson Member Outcomes Tracker suggests that most members, whether younger, mid-career or approaching retirement, are likely to be broadly on track relative to their longer-term goals:

What might this mean in terms of living standards in retirement?

Although this will have been a challenging year for most members, there is at least some reason for them to feel more confident about their longer-term plans. For example, individuals targeting a minimum living standard can still expect to afford a holiday in the UK each year, and those targeting a more comfortable living standard should still afford luxuries in their retirement.

The economic outlook over the short to medium term remains uncertain, so we can expect members’ progress towards longer term goals to move around. It’s therefore crucial that we take steps to keep members engaged, and to keep contributing where they can afford to do so.

What’s in store for the next 12 months?

We would like to see the great adoption of the standards continue through the next 12 months. Whilst members are likely to be on track relative to longer term goals, there remain a number of challenges which could de-rail their progress. It is crucial that members can access information and modellers that help them understand their retirement choices in a relatable way, and potentially take action to improve their retirement outcome.

Similar to DC pensions, unfortunately no one can provide any guarantees around the future of COVID-19. However, after the year we have all had, we can all wish for a very normal 2021!

If you have any questions or would like more information about our Member Outcomes Tracker, please get in touch.