Estimates of sum needed for a ‘modest’ retirement vary by £500,000
LONDON (15 October 2019) - Aon, (NYSE:AON) a leading global professional services firm providing a broad range of risk, retirement and health solutions, has said that the forthcoming launch of the Pensions and Lifetime Savings Association’s (PLSA) ‘Retirement Living Standards’ at this year’s annual conference should help put much-needed focus on the issue of what people really need for a comfortable retirement.
The issue was highlighted at Aon’s recent defined contribution (DC) pension conference, at which estimates of the size of DC pot needed for retirement varied widely. Over 70 trustees and pensions managers of DC schemes attending the conference were surveyed on what a single member would need to meet a ‘modest’ standard of living - with ‘modest’ defined as the middle of three states: ‘basic’, ‘modest’ and ‘comfortable’. ‘Modest’ was defined with features such as:
- Holidays in Europe
- Basic car
- High street clothing
On average, the attendees estimated that a single member would need a fund of around £600,000 in order to achieve this modest standard of living at the point of retirement. But overall, the answers – from pensions industry professionals - ranged from around £300,000 to £800,000.
Karina Klimaszewski, senior DC consultant at Aon, said:
“The range of answers we received gives a clear illustration of the breadth of opinion on just what figure is needed for retirement. If pensions professionals display this disparity in thinking, how easy can it be for scheme members to estimate what their future retirement needs will be? The range of answers we received differed by half a million pounds – not a sum anyone can easily save.
“The aim of the conference exercise and survey was to get the attendees to put themselves in members’ shoes regarding how hard it is to know how much to save for retirement. Bear in mind also that Aon’s 2018 DC Survey of scheme members found that over a third of those with DC pensions expect to experience a fall in their living standards in retirement. Karina Klimaszewski continued:
“As an industry, helping people to understand their target saving level, their existing provision from employer schemes and their state pension, it’s vital that we find better ways both to understand what their retirement needs will be, what they will need to achieve that, and how they can reach an adequate retirement saving that will meet their lifestyle expectations.
Karina Klimaszewski continued:
“As an industry, helping people to understand their target saving level, their existing provision from employer schemes and their state pension, it’s vital that we find better ways both to understand what their retirement needs will be, what they will need to achieve that, and how they can reach an adequate retirement saving that will meet their lifestyle expectations.
“We hope that the PLSA’s work in this area will be a major contribution to the thinking within the industry on what after all, is the key question for anyone planning for their retirement.”
Media Contact
Colin Mayes
Aon
07801 748138
[email protected]
Anelia Fikiina
Kekst CNC
020 3755 1629
[email protected]
Notes to Editors
About Aon
Aon plc (NYSE:AON) is a leading global professional services firm providing a broad range of risk, retirement and health solutions. Our 50,000 colleagues in 120 countries empower results for clients by using proprietary data and analytics to deliver insights that reduce volatility and improve performance.
Aon announced in May 2018 it will retire the business unit brands of Aon Benfield and Aon Risk Solutions, which follows the retirement of the Aon Hewitt business unit brand in 2017. This move was designed to increase the rate of innovation across the firm and make it easier for colleagues to work together to bring the best of Aon to clients. Aon has five specific global solution lines: Commercial Risk Solutions, Reinsurance Solutions, Retirement Solutions, Health Solutions and Data & Analytic Services.
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