牛津經(jīng)濟(jì)研究院-探討英國(guó)養(yǎng)老金繳款增加的影響（英）-2024.2

Exploringtheimplicationsof

higherpensioncontributionsintheUKEXPLORING

THEIMPLICATIONSOFHIGHERPENSIONCONTRIBUTIONSINTHEUKREPORT

FORROYAL

LONDONFEBRUARY2024Exploringtheimplicationsof

higherpensioncontributionsintheUKABOUT

OXFORDECONOMICSOxfordEconomicswas

foundedin1981asacommercialventurewithOxfordUniversity’sbusinesscollegetoprovideeconomic

forecastingandmodellingto

UKcompaniesandfinancialinstitutionsexpandingabroad.

Sincethen,wehavebecomeone

of

theworld’sforemostindependentglobaladvisoryfirms,providingreports,forecastsandanalyticaltoolson

morethan200countries,100industries,and8,000citiesandregions.Ourbest-in-classglobaleconomicand

industrymodelsandanalyticaltoolsgiveusanunparalleled

abilitytoforecastexternalmarkettrendsand

assesstheireconomic,

socialandbusinessimpact.Headquartered

inOxford,

England,

with

regionalcentres

in

New

York,

London,

Frankfurt,

and

Singapore,Oxford

Economics

has

offices

across

theglobe

in

Belfast,Boston,Cape

Town,

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Kong,

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Angeles,

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City,Milan,

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Sydney,

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Toronto.We

employ

600staff,

including

more

than

350professional

economists,

industryexperts,

andbusinesseditors—one

ofthe

largest

teams

of

macroeconomists

and

thought

leadership

specialists.Our

globalteamis

highly

skilled

ina

full

range

of

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techniques

and

thought

leadership

capabilities

fromeconometric

modelling,

scenario

framing,and

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impact

analysis

to

market

surveys,case

studies,expert

panels,

and

web

analytics.OxfordEconomicsis

akeyadviser

tocorporate,financialandgovernmentdecision-makersandthoughtleaders.Ourworldwideclientbasenowcomprisesover

2,000internationalorganisations,includingleadingmultinationalcompaniesandfinancialinstitutions;keygovernmentbodiesandtradeassociations;andtopuniversities,consultancies,andthinktanks.February2024Alldatashownintables

andcharts

areOxfordEconomics’owndata,exceptwhereotherwisestatedandcitedinfootnotes,

and

arecopyright?OxfordEconomicsLtd.Themodelling

andresultspresentedhereare

basedon

informationprovidedbythirdparties,uponwhichOxfordEconomicshas

reliedinproducingitsreportandforecastsingoodfaith.

Anysubsequentrevisionorupdateofthosedatawillaffect

theassessmentsandprojectionsshown.Todiscussthereportfurtherpleasecontact:HenryWorthington:hworthington@OxfordEconomics4Millbank,LondonSW1P3JA,UKTel:+442039108061Exploringtheimplicationsof

higherpensioncontributionsinthe

UKFOREWORDAutomaticenrolmentis

oneofthemostsuccessfulpublicpolicyinnovationsofmodern

times.Followingdecadesoffailedattempts,themovefrom‘optin’to‘optout’hastransformedemployeeparticipationinworkplacepensions,

doublingtake-upintheprivatesectorinjustafewyears.However,thereiswidespreadacceptancethatthepolicyremainsunfinishedbusiness,withcontributionrateswellbelowwheretheyneedtobetosecurea

decentstandardoflivingformostpeopleinretirement.MorethantenyearsonfromtheForewordfromBarryO’Dwyer,GroupCEO,RoyalLondonintroductionofautomaticenrolment,thereis

stillnoplaninplacetoaddressthis.Manycommentatorsmakethepointthatnowisn’tthetimetobeincreasingpension

contributions,whenincreasesinthecostoflivingmeanthatemployersand

employeesface

manyotherfinancialchallenges.However,

thisshouldn’tstopusfromconsideringaplantoimprovepeople’slonger-termfinancialwellbeing.Afterall,policiesof

thisnaturetend

toprogressoverdecadesratherthanyears.AbaselinefordrivingdiscussionWecommissionedOxfordEconomicstocarryoutresearchtoexaminesomecommonlyheldviews,inordertoprovideabaselinestudyfordrivingdiscussion

aroundthe

long-termapproachtotake.Forinstance,it'seasytoseethatincreasingpension

contributionswill,formostpeople,improvetheirretirementyears.It’salsoclear,however,thatpayingmore

intopensionswillaffect

whatmoneypeoplehavetospendtoday.Thereis

somefairlypredictableshort-termpain,foralonger-termgain.Arguably,the

impactontheeconomyofincreasingpensioncontributionsis

justas

significantaconsideration.Pension

schemesinvestbillionsinUK

companies,andallthemajorpoliticalparties

arealivetotheopportunitiesofbuildingonthisthroughmore

targetedinvestment,particularlyinstart-upventuresinsectorswheretheUK

hasrenownedinnovationcapability.Equally,

amorefinanciallyresilientretiredpopulationis

likelytoreducerelianceon

statebenefits,increasetaxreceipts,andimprovespendinginthe

realeconomy.MovingtowardsaneffectivesolutionTheresultsoftheresearch

clearlyshowtheshort-term

challenges,but

alsopointtothelong-termrewards—foreveryone.Themodellingdoesnotaccountforanyfurtherpolicyinterventionsfrom

thegovernment,otherthanimplementingtherecommendationsofthe2017automaticenrolmentreview,whicharewelladvanced.Asaresult,the

insightsprovideanopportunitytoconsiderhowdownsidesmightbemitigated,orupsidesincreased.Forexample,agovernmentthatismindedtoreducetaxesforemployers,

employees,orboth,couldconsiderhowthismightbeused,inpart,tooffsetincreasedpensioncontributions.Thiscouldhelpaddresstheargumentthatanyincreaseswouldsimply

beseenasataxonemployment.Asisnotedinthisreport,only40%ofemployees

areon

trackfora

“moderate”standardoflivingwhentheyretire,basedon

currentsavings

levelsand

withtheaforementionedpolicyinterventionsalreadyinprogress.Ihope

youfindtheanalysisinthisreportprovides

aninterestingandinformativecontribution

tothedebateabouthowwemovetowardsamoreadequatelevelof

retirement

savings.2Exploringtheimplicationsof

higherpensioncontributionsinthe

UKTABLEOF

CONTENTSForeword....................................................................................................................................................2Executivesummary................................................................................................................................41.

Background..........................................................................................................................................92.

Modelling

whoisimpacted........................................................................................................

113.

Macroeconomicimpact...............................................................................................................

144.

Impact

atthehousehold

level...................................................................................................

195.

Concluding

comments.................................................................................................................

266.

Appendix............................................................................................................................................

273Exploringtheimplicationsof

higherpensioncontributionsinthe

UKEXECUTIVESUMMARYUKHOUSEHOLDSCURRENTLYSAVE

TOO

LITTLEFORRETIREMENTMostprivatesectoremployeesfailtosaveadequatelyfora

moderate

standardoflivinginretirement

,1despitetheimplementation

of

automaticenrolmentandrecentlegislationtoexpandthosein

scopeofthisscheme.Ouranalysisindicatesthatonly40%ofhouseholdswith

anindividual

pensioninadefinedcontribution(DC)

schemeareexpectedtopossessthenecessarysavingsforamoderatelivingstandardinretirementby2040.RoyalLondoncommissionedOxfordEconomicstoevaluatethepotential

benefits

ofimplementingreformsthat

couldincreasethemandatedminimumcontribution

inprivatesector

DCschemes.Thisstudyassessestheimpactof

reformoptionsatthemacroeconomicandhousehold

levels.THREESCENARIOS

ARE

MODELLEDTOASSESSTHEIMPACT

OF

ARANGEOF

POTENTIALINCREASESTOTHEMINIMUMPENSIONCONTRIBUTION

LEVELUnderexistingregulationsforindividualsenrolledina

DCscheme,aminimumcontributionof8%oftheirsalaryisrequired.Employersmustpayaminimumof3%,leavingtheremainingportiontobecoveredby

theemployee.

Wehavemodelled

threescenariostohighlighttherangeofpotentialimpactsofreformsforthoseinaDC

scheme:???Scenario1:

employersraisecontributionsto5%,resultingin

thetotalminimumcontributionlevelincreasingto10%(employees’contributionsremainunchanged

at5%).Scenario2:

employersand

employeesincreasecontributionsto6%,leading

tototalminimumcontributionsof12%.Scenario3:

employersand

employeesraisecontributionsto7%,causingtotalminimumcontributionstoincreaseto

14%.Ourmodellingintroducesthechangesfrom2025,

whenthemacroeconomicenvironmentis

expectedtobemorestable.This

also

enablesus

toassessthelonger-termimpactusingOxfordEconomics’globalmacroeconomicmodel.Inaddition,thechangesareintroducedgradually:

employersandemployersincreasecontributionsby0.5pptseachyear

inthescenarios.THESESCENARIOS

RAISEPENSIONCONTRIBUTIONSFORALARGEPROPORTIONOFINDIVIDUALSIN

ADCSCHEMEOurmodellingfindsthat65%

ofemployeesinaDCpensionschemeareexpected

toseetheir

totalpension

contributionsincreasein

Scenario1,underpinnedbyanincreasein

employercontributionsinthisscenario.InScenario2and3thisproportionrisesfurtherto

90%and93%,respectively,consistentwiththelargerincreaseinthe

minimumcontributionrate.AsshowninFig.1,we

estimatethatinthe

near

term,

theemployerwillbearmostofthecostburdenacrossthescenarios.InScenario1theemployerwillbearthe

entireadditionalcostsas

theemployee1

BasedonPSLA

RetirementLiving

Standards.4Exploringtheimplicationsof

higherpensioncontributionsinthe

UKcontributionsremainunchanged.

InScenarios2and3,boththeemployerand

employeewillneedtoincreasetheircontributions

tomeetaminimumof12%and14%.

Overtimetheburdenofcostswillreflectthe

extenttowhich

employerspassoncoststoemployeesin

theformoflowerwageand

salaryrises.Fig.1.Additional

annual

pensioncontributionsbysourceforanaverageemployee,2023prices2HIGHERPENSIONCONTRIBUTIONSAREEXPECTED

TORESULT

IN

STRONGER

ECONOMICGROWTHINTHELONGERTERMUNDERPINNEDBYLARGER

BUSINESSESINVESTMENTIncreasingmandatorypensioncontributionsisexpectedtoimpactthe

broader

economyintheshortandlongterm.Theeconomicimpactineachscenarioisdrivenbyfourchannels.????Wagesand

salaries:

increasedemployeeretirementsavingswillreducepaytodayandemployersareexpectedto

passoncoststoemployees,furtherloweringwagesandsalaries.Increaseddisposable

incomeinretirement:

increasedpension

savingsdue

tothereformswillresultinhigherdisposableincomeforindividuals

whentheyretireinthe

future.Privatesectorbusinessinvestmentimpact:

higher

employerand

employeecontributionswillleadtomorepensionassetsthatcanbeusedforinvestmentintheUK.Directfiscalimpact:higheremployeeand

employer

contributionswillcausewagesandsalaries

andcompanyprofitstofall,reducingtaxrevenuesforthegovernment.Overthe2025–2040period,

disposableincome

isbetween0.1%and0.4%lowerthanthebaseline,dependingonthescenario.Theimpactondisposableincomeislargerinthe

near

termdrivenbyincreasesinpension

contributionsreducing

wagesand

salaries.Thehittodisposableincomestartstofadeoverthe

forecastperiodsupportedbyhigherpensionincomes

andstrongereconomicgrowththatresultfromthepolicychange.Ourmodellingindicatesthattheaverageannualinvestmentisbetween￡60

millionand￡2.9billionhigher(in2023prices)than

thebaseline,dependingon

thescenario,overthe

2025–2040period.Theinvestmentimpactgrowsovertime,drivenbytheincreaseinpensionassetsavailabletoUKbusinesses,which

cansupportadditionalinvestment.By2040,GDPishigherthanthebaselineinall

threescenarios

asincreasedbusinessinvestmentboostseconomicactivity(Fig.2).TheGDPgainsinScenario3arethelargestat￡7.4billionin2040.Thisistobeexpectedasthisscenarioseesthe

highestincreaseinminimumcontributions.

However,2

BasefiguresderivedusingtheWASfortheperiodQ2

2018-Q12020andinflatedusingthechangeinCPIbetween2019and2023(OEforecastfor2023)5Exploringtheimplicationsof

higherpensioncontributionsinthe

UKthiswillcomeatashort-runcostwithGDPlowerrelativetothebaselineacrossall

threescenariosintheshorttermasthepositivebenefitsofadditionalinvestmenttaketimetooffset

lower

disposableincome.Ourmodellingestimates

thatoverthe

2025–2040period,averageannualGDPisexpectedtobe￡2.6billionhigherin2023pricesthanthebaselineinScenario3

and￡1.6billionhigher

inScenario2.Between2025

and2040,averageannualGDPisexpectedtobelargelyunchanged

inScenario1astheincreaseinthe

longrunisoffsetby

thefallintheshort

run.Fig.2.ImpactonUK

GDP,2023

pricesUKadditional

GDP,

realMillions

￡:Chained

2023

prices8,0006,0004,0002,0000-2,000-4,0002024

2025

2026

2027

2028

2029

2030

2031

2032

2033

2034

2035

2036

2037

2038

2039

2040Scenario1:10%Scenario2:12%Scenario3:14%Source:

Oxford

EconomicsOuranalysissuggeststhattheaverageannualreductionin

governmentrevenues,overthe2025–2040period,rangesfrom￡500millionto￡2.9billion(in2023prices)dependingon

thescenario.

Thisisdrivenbythedirectimpactontaxrevenuesofincreasedpensioncontributionsreducingwagesandsalaries,andcompanies’profitsoutweighingthefiscalgainsfromstrongereconomicgrowth.

Thefiscalimpactislargestintheshorttomedium

termdrivendirectlybythe

falls

inincomethatresultfromincreased

contributionsandamplifiedbylowerGDP.AstheimpactofthepolicyonGDPturnspositivein

themediumtolong

term,themagnitudeof

thefiscalcostreduces.HIGHERPENSIONCONTRIBUTIONS

AREEXPECTEDTOINCREASETHELIVINGSTANDARDFORRETIREES,BUT

MAYNOT

BEAFFORDABLEFORPOORERHOUSEHOLDSRaisingpension

contributionsimprovestheadequacy

ofindividuals’retirementsavings,butitalsoimposesan

extrafinancialstrainonhouseholds

before

retirement.Inthebaselinescenario,only40.4%ofhouseholdswithanindividual

in

aDCschemeareexpectedtobeontracktoreachtherequiredpensionsavingsforamoderatelivingstandardin

retirement.

Thehousehold-specificpension

savingsthresholdisbased

onthePensionsandLifetimeSavingsAssociation’s(PLSA)

estimateoftheincomerequired

toprovideanindividualwitha

comfortableyetnotextravagantlifestyleaftertheirworkingyears.Anunequalpatternisfoundwhenassessingpension

adequacyacrosshouseholdincomequintiles.

Themedianhousehold

inthe

lowestquintileonlyhas42.0%ofthesavingsrequiredforamoderateretirement,while

themedianhouseholdin

thetoptwoincomequintilesexceedsthethresholdrequiredforamoderateretirement.Themedianfor6Exploringtheimplicationsof

higherpensioncontributionsinthe

UKthecombinedMillennial&GenZhousehold

andGen

Xhouseholdsarebothbelowthisthreshold,thoughthemedianGenXhouseholdis

closertothisthreshold,possessing87.1%

oftherequiredpensionsavingswhilethisis

72.5%forthe

combined

Millennial

&Gen

Zhousehold.Ineachofthereformscenarios,thereareimprovementsinboththe

levelofpensionsavingsforthemedianhouseholdrelativetothethresholdforamoderateretirement

andthe

proportionofhouseholdsexceedingthethreshold.InScenario3,theproportionof

pensionsavingsrelativetothe

moderateretirementthresholdheldbythemedianhouseholdrisesby15.9pptsto

94.8%ofthethresholdforamoderateretirement.In

Scenarios1and2,theincreasesare

smaller

withtheproportionofsavingsrelativetothethresholdrisingby4.7pptsand11.5pptsrespectively

(Fig.3).Fig.3.Changesinthesavingsadequacy

ofpensions

inthe

medianhouseholdacrossthescenariosProportion,

100%

=Adequate

savings,2040Moderate

retirement

threshold100%94.8%95%90.4%90%83.6%4.7%15.9%85%80%75%70%11.5%78.9%78.9%78.9%Scenario1:10%Scenario2:12%ScenariochangeScenario3:14%BaselineScenarioSource:

Oxford

EconomicsSimilarly,theproportionof

householdswhoareontracktoreach

themoderateretirementthresholdin2040increasesineachscenario.InScenario3,theproportionofhouseholdsreaching

thethresholdincreasesby6.8pptsfrom40.4%to47.2%.Thisincreaseis

smallerforScenarios1and2withtheincreaseinthe

proportionofhouseholdsreaching

the

thresholdrisingby1.3pptsand4.5pptsrespectively.Higherincomehouseholds

experiencethemostsubstantialgains,giventheirhigherearnings

butincreasedcontributions

still

helptoincrease

pension

savingsamongthoseinthe

lowerincomequintiles.InScenario3thelowestquintileseestheir

pensionsavingsadequacyrelativetothemoderateretirementthresholdrise

bybetween2.5pptsand9.1ppts

dependingonthescenario.Ineachscenario,bothGen

XandMillennials&GenZ

(combined)seeimprovementsin

theirpensionsavings

compared

tothethresholdrequiredforamoderateretirement.However,

Millennials

&GenZseethelargestrisewiththegaptothethresholdforthemedianhouseholdinthisgroupnearlyclosingin

Scenario3.Thisunderscoresthepotentialimprovementhouseholdscanexperiencebyincreasingtheirpensioncontributionsatayoungerage,underpinnedbythecompoundingeffectofinvestments.7Exploringtheimplicationsof

higherpensioncontributionsinthe

UKHowever,higherpension

contributionswillbe

anadditionalfinancialburdenonhouseholdsbeforeretirementwhichmayputfinancialpressureonsomehouseholds.Employeeswillneedtopayforanyemployeecontributionincreaseas

wellasanyadditionalcostspassedonby

employersintheformoflowerwagerises.Ourfindingsuggeststhismaybe

aparticularproblemforthosein

thelowestquintileasthehigherannualcontributioninScenario

3

equatestojustover11%oftheireasy-to-accesssavings,overthreetimestheaverage.Furthermore,justoveronein10householdsinthelowestquintileareexpectedtohavelessthan￡100in

easy-to-accesssavingswhenthepolicyisintroducedbyourmodelling

in2025.InScenario1,thefinancialburdenissignificantlylessthanScenario2and3astheemployerraisestheirpension

contributions.

Therefore,while

itprovidessmallerbenefitsforthepoorerhouseholds,Scenario1mayprovide

themwithabetteroveralloutcomeasthefinancial

costinthe

short

termismorelimitedandtheywill

seean

improvementinthelongerterm.CAREFULPOLICY

DESIGN

IS

NEEDEDTOREALISETHE

BENEFITSOF

INCREASINGPENSIONCONTRIBUTIONSANDMITIGATEAFFORDABILITYCHALLENGES

FORPOORER

HOUSEHOLDSOurmodellingfindsthatonly40%ofhouseholdswith

anindividual

inaDCschemeareexpectedtohavetherequired

savingsforamoderatelivingstandardinretirementin

2040.

Weillustratethathigherpension

contributionscouldleadtoalargerpoolofassetsavailabletoinvestinUKbusinessesboostingeconomicgrowth.Italsoresultsinanimprovementin

theadequacyofpensionsavingsandleadstohigherdisposableincomefor

households

uponretirement.Thiscould

potentiallyalleviatetheassociatedburdenontheStateofsupportingthosewhohavenot

savedenoughforretirement.However,higherminimumpensioncontributionscomewith

trade-offs.Poorerhouseholds,withlimitedaccessiblesavings,

mayfind

itchallengingtoaffordincreasedpensioncontributions.A

modestraiseintheminimumcontributionlessensthe

financialstrainonthesehouseholds,

butitprovidesthesmallestbenefitintermsofoveralleconomicgrowthandpensionadequacyimprovement.Affordabilityislessofanissueforthoseonhigherincomesasthey

can

affordtoincreasetheirpension

contributionsand

willbenefitfromthelonger-termgains.Thisshowsthedelicatebalanceinvolvedinraising

pensioncontributions

andsuggeststhatabluntsolutionsuchasauniformincreaseinpensioncontributionsforallindividualsmaynotbeappropriate.Indeed,thePSLAindicatesthatthestatepensionlargelycoverstheamountrequiredforaminimumstandardoflivinginretirement.Therefore,

amorecarefullydesignedpolicy,which

paysparticularfocustoaddressingaffordabilityissuesforthepooresthouseholds,

couldhelptoensurepensioncontributionreformsbroadlyachieve

theirobjective(ahigheroverallrateofpension

saving)―withoutcreatingshort-termliquiditypressures

forthepoorest

households.8Exploringtheimplicationsof

higherpensioncontributionsinthe

UK1.BACKGROUNDOVERVIEWOFTHEDEFINEDCONTRIBUTION

PENSIONLANDSCAPETheproportionofemployees

withpensioncontributionsinthe

UKhasbeenhistoricallylow,andwasonadownwardtrendsincethe1980s,underpinnedby

asignificantfallindefined

benefit(DB)schemes

.The2008Pension

Actaimedtoaddressthisissueby

reducingthe

number

ofpeoplenot3saving,orsavingtoolittle,forretirement.Akeyfeatureofthesereformswasautomatic

enrolment,whichrequiresemployerstoautomaticallyenrolallemployeeswhomet

aset

ofcriteriaintoapensionscheme.Minimumcontributionsrequiredby

employersandemployeeswerephased

in,reaching8%ofpensionableearningsin

2019.Aminimumof3%isrequiredbytheemployer,whiletheremaindermustbecontributedbytheemployee

.4Automaticenrolmenthasledtoasignificantincreasein

thetotalmembershipof

definedcontribution(DC)pension

schemes

.Therewere12.9millionmembersof

DCschemesin2021

comparedtoonly560.9millionin2011

.Privatesectorpension

contributionshavealsoincreasedinrealtermsacrossall7occupations

.Thishassuccessfullyreversedthedownwardtrendin

workplacepension

savingsseen8priortothereform

.9Despitethe2008reforms,

concernsremain

thatmany

workersin

theUKarestillsignificantlyunder-savingforretirement.TheUK

governmenthas,inpart,recognisedtheneedtogofurther,havingrecentlylegislatedtoreducetheautomaticenrolment

agelimit

andtoremovethelowerlimiton

the“qualifying

earningsband”sothatcontributionsare

paidfromthefirstpound

earned.

However,thereisnowagrowing

consensusthattheminimumcontribution

requirementmustincrease,withthePensions

andLifetimeSavingsAssociation(PSLA)arguingitshouldbe

increasedtoatleast

12%

.10Indeed,severalotherdevelopedcountries,

such

asAustralia,

Canada,

andDenmark,havealreadymandatedincreasestotheir

minimumpensioncontributionlevels.BENEFITSOFINCREASINGMINIMUMCONTRIBUTIONLEVELSMostprivatesectoremployees

donotsave

enoughto

ensureareasonablestandardoflivinginretirement.We

estimatethatin2040only40%ofhouseholds

withanindividualin

aDCschemeareexpectedtohavetherequiredsavingsforamoderatelivingstandard

inretirement.

Thisisevenafter11accountingfortheexpectedchangesto

theautomaticenrolment

ageandqualifyingearningsband.3

Defined

Benefit

pension

schemes,HouseofCommonsLibrary,20094

Partofthis

contributioncomesintheformofataxrelieffromthegovernment.5

Adefinedcontributionschemeisaretirementsavingsplanwherebothemployersandemployeesregularlycontributepredeterminedamountstoanindividual’spensionaccount,withthe

eventualpension

pay-outdeterminedbytheaccumulatedcontributionsandinvestmentreturns.6

ASHE2021includingthoseonaDC

andgrouppensionscheme.7

Occupational

Pensions

Schemes

Survey,ONS20118

Ten

years

of

Automatic

Enrolment

in

Workplace

Pensions:

statistics

and

analysis,DWP,20229

Pensions:

automatic

enrolment

-

current

issues,HouseofCommons

Library,202310

Five

Steps

to

BetterPensions,PLSA202211

BasedonthePLSAestimateofa

moderateincomeinretirement.9Exploringtheimplicationsof

higherpensioncontributionsinthe

UKRetirementplanningis

difficultandeconomicliteraturesuggeststhat

short-sighteddecisionmaking(“myopia”)oftenpreventsindividualsfrommaking

adequatepensioncontributions.Thisispartlydrivenbyastatusquobias,

apreferencetomaintaintheircurrentsituation

ratherthantomakechanges,whichleadsindividualstostickwithdefaultoptions.Inmanycases,thismaymeanthecurrentminimumcontributionrates.

However,itisimportanttonotethatforsome

individuals,under-savingforretirementis

simplytheresultoftheir

lower

incomeandalackof

easy-to-accesssavings.Higherpension

contributionswillalsoincreasethepoolofpensionassetsavailableforUKinvestment.Thisalignswiththerecent

MansionHouseReforms,whichshowthegovernmentis

interestedinboostinginvestmentinbusinessesusingpension

assets

.12AIMANDSTRUCTUREOF

THISREPORTInthiscontext,RoyalLondoncommissioned

OxfordEconomicstoassessthepotentialbenefitsofreformstoprivate-sectorpensionschemes

thatincreasethemandated

contribution.

Inthisreportthree