Abrdn PLC (LSE:ABDN) chief executive Stephen Bird has called for a doubling of minimum pension contributions from 8% of pay to 16% in what would amount to a huge change to the retirement saving rules.
Bird reckons millions of people are heading for an inadequate income in retirement because the present minimum 3% contribution from employers and 5% from employees is not nearly enough.
Writing in The Times, Bird said: “To have any chance of achieving decent retirement outcomes, the contribution rate needs to double - taking it closer to the levels seen in other developed economies, or indeed, the Abrdn employee scheme.”
More “visionary thinking and boldness” is needed from ministers, said Bird, whose firm manages £368 billion of savings for pension funds and individual investors.
Minimum contribution rates were initially set at 1% for employers and 1% for employees in 2012 when the auto-enrolment pensions regime was first phased in, and were raised in both 2018 and 2019.