The PLSA Retirement Living Standards will be updated in February to reflect the latest research conducted across the UK and independently calculated by the Centre of Research in Social Policy at Loughborough University.
Speakers:
Simon Sarkar
Head of Research, PLSA
Matt Padley
Co-Director of the Centre for Research in Social Policy
Chair:
Nigel Peaple
Director of Policy and Advocacy, PLSA
Okay so uh welcome everyone to uh the psa’s webinar on the new retirement living standards and very importantly um on the research that’s underlying them my name is Nigel people I’m the director of policy and advocacy at the plsa and I’m very pleased to have uh two expert
Speakers on this to subject with us today Simon Saka our head of research he will introduce the high level approach to the retirement living standards and he will reveal the new numbers if you haven’t already come across them uh in the media today and he will explain a
Bit about them and then we’ll be going on to Professor Matt Padley of the center for research in social policy at the at Luffy University uh they’re the people who actually uh lead the research on this and do all the detailed work all the focus group discussions with people
From across the country and Matt will be going into quite a lot of detail about what’s changed uh and in particular he’ll be playing back some of the kind of comments and sentiments he’s heard uh from the focus groups and then we’ll do some Q&A um however just before we kick
Off uh in Earnest I just like to say a few words of background um we set up the retirement living standards about five years ago to help people understand how much they need in retirement this was an idea that came from our member Pension funds and our Our member business
Members because they felt this was really a gap uh in the UK now the retirement living standards as I suspect lots of you know uh focus on three different Lifestyles three different living standards and they are expenditure figures not income figures and I know that’s often quite confusing for for people but
Nevertheless uh it all will become clear during this session if you’re not already clear on it um and we’re very very pleased that they’ve been widely adopted as a frame of reference by the pensions industry by Research b uh and even the government and Regulators use them uh and we’re very
Pleased that the media talks about them because we want everyone in the UK to have a good idea how much money they’ll need in retirement and then this fits with the many efforts by advisors by pension schemes pension providers plsa um and others like the money and pension
Service to try and help people ensure they’re saving enough uh to have the retirement that they want now the retirement living standards are uh free to use and we greatly appreciate the support of the friends of retirement living standards who had some pension schemes and companies that
Helped the PSA fund them and details of them uh are on our website so that was my brief words of intro now let’s move on uh this is a a zoom call and it has a chat function and it also has a Q&A function and so please feel free to put
Your questions in the Q&A function and it has a voting capacity so you can vote up your favorite questions and uh even if they’re tricky I will do my best to read them out and pose them to our our two experts here right so um without
Further Ado let’s move on and over to you Simon thanks very much Nigel and thanks everyone for joining us on the session today so as Nigel said I’m going to set out a bit of context for the research how the RLS research program has been designed before we take a look
At the very latest RLS figures that were launched ing today I’ll then hand over to Professor Matt Padley to take us through the reasons behind the changes and to give us some more insights from the many hours of research that the team at lfra have conducted with participants around the
Country so first of all let’s have a look at the research itself in 2019 we launched the very first RLS research that set out for the first time what the public agree is needed to be different standards of Liv living in retirement since 200 Nate the center for
Research and social policy at lury University has been res researching what the UK public think is needed for an adequate incoming retirement at a minimum level so what single and partner of retire people need for a minimum socially acceptable standard of living in retirement and also showings what
What is needed by a range of different working age households the research we launched in 2019 built on the research approach from the minimum and extended it to explore The public’s consensus on what higher standards of living would look like it produced a detailed account of the goods
Services and activities that combined to describe a moderate and a comfortable standard of living in retirement and crucially set out the expenditure needed to reach these different levels the single and part of retirees I will emphasize here that what is produced is the expenditure required to achieve the standard sometimes people query whether
It’s gross income figures but the fig are actually the pounds and Pence of total expenditure required so after the initial research the following year these retirement living standards were simply upgrated based on changes in prices as captured by CPI to ensure the standards kept in line with prices I say simply but
Actually it’s a pretty intensive process by Matt and his colleagues to adjust the prices by the corresponding appropriate more granular subcategory within the CPI measure rather than just the headline rate and that ensures that the most appropriate inflation maters appli to a specific cost the review that took place in 2021
Was a kind of hybrid approach combining research for the public focused on identifying any changes in the needs for a moderate or comfortable standard of living combined with CPI adjustments to costs against the backdrop of the covid restrictions this also means a pivot to online discussion groups with 84 members
Of the public across 10 discussion groups in 2022 these amended budgets for single and partner retirees were once again upated based on changes in prices captured through CPI so that concluded our first four-year cycle of the RLS updating sequence having completed a full four-year cycle our latest research in
2023 marks the first rebase of the RLS with new research undertaken with 14 groups of members of the public across the country have involved over 130 people in 54 hours of interviewing to detail what’s needed for a moderate and comfortable standard of living in retirement from scratch in essence this is repeating the
Research undertaken in 2019 but also informed by all of the preceding discussions with members of the public so we capture not only the revised budgets for the standards but also in sight about how people’s expectations about retirement are changing over time next slide please before we take a look at the
Numbers let’s take a moment to look at the definitions of the standards running through all three are the themes of choice opportunity and security and the different different standards can be seen to vary in the amount of each they offer these definitions have been formulated and discussed at length with
The group discussions from the early research but also Revisited in the subsequent research the minimum standard living in the UK today includes that is more than just food clothes and shelter it’s about having what you need in order to have the opportunities and choices necessary to participate in
Society and the experience of Co sharply Illustrated the impact of people not being able to do the things that make them feel part of society it’s not a standard of Last Resort and importantly describe what the public think that all people today should have as a minimum similarly the moderate standard
Is rooted in the discussions with the public and stands as the in between level enabling you to do more than at the minimum but not to do much of what is described within the comfortable so at this moderate living standard there may be a balance between finding ways to
Continue doing the things that you want to do without necessarily having the level of resource and tempering expectations as to how frequently we able to do these things in retirement what most clearly differentiates the moderate from the minimum is the sense of security that comes for example from
Knowing that all your minimum needs are met and being able to do some of the things you’d like to do in retirement as opposed to what you need to do in order to feel part of or included in the society in which you live finally the comfortable level is
Marked by an enhanced level of opportunities and choices allowing you to do much more than the minimum and the moderate and to feel much more financially secure with a greater Financial buffer offering more peace of mind than the moderate whilst choice is an important feature of all the standards at the
Comfortable level they have more choices and opportunities but not Limitless Choice a point I wanted to make here is that there is a definitional Continuum starting at the minimum and extending beyond the comfortable so while the public may come to a consensus about a standard there may be elements within a
Particular living standard that are more or less important to an individual or household which may mean that the living standard people expect or plan for may fall between for example the minimum or moderate standard and that’s okay and it’s to be expected in fact there are tools that have been developed that
Enable pension Savers to swap out different elements to create a more bespoke and individualized living standard but meet the needs and circumstances of that individual next slide please so here are the standards from 2022 for the minimum moderate comfortable and for a single person and for a couple but let’s do the reveal
Let’s take a look at the very latest retirement living standards thank you so here we have the minimum moving up to almost 14 and a half moderat over 30 and comfortable at 43 and for cou couples it’s just under 22 and a half at the minimum 43 at the moderate 59
Comfortable we just take a quick look at we’ done with the changes as you can see all the standards have moved upwards it’s probably not surprising given the impact of the price Rises but you have noted the strong movements upwards at the moderate so the one of the drivers of
The changes that you can see Well you certainly won’t be surprised to hear that energy price Rises and food price rise RIS Rises have contributed an element of upward movement and the standards but there are some more interesting Dynamics at play aside from the obvious price increases of the
Headline rout particularly around the big movements in the moderate standard which relates the Public’s expectations about what should be included and also within the comfortable standard where the public decided to reassess their expectations Matt’s going to delve into some of these insights from the research and also tell us more more detail about
How the research has been carried out over to you mate thank you um I’d like to start by apologizing if you hear Drilling and and banging in the background um wisely the people who are painting the doors have decided now is a good moment to start that so um
Apologies um and thank you for for kind of givv me the opportunity to talk about the research we’ve been doing it started back in 2018 um before I get into looking at some of the principles of the work that we do um and how we do it the kind of
The the process and then uh drawing out some of the highlights of of the work um I think it’s important to kind of pause and talk a little bit about context Nigel and Simon have have done some of this um but uh just I think three or
Four key points uh to note um in kind of making sense of of what what comes after this um so firstly that context is crucial um we’ve been doing work on living standards since 2006 um focused for much of that time on minimum living standards um and we
Regularly return to that work because we know uh the world changes um there changes in uh all sorts of things that can have an impact on people’s understanding uh of what living standards should be that kind of shared understanding um but also that kind of bring challenges to living standards as
Well um the past couple of years have posed significant challenges to living standards um uh lots of stories um over the past two years about the kind of stagnation in living standards um and those real pressures that lots of lots of households are facing um as a consequence of increas
Costs um and they are substantial challenges and despite the kind of decreasing or the falling rate of inflation prices continue to rise and I think it’s important to kind of uh put this research in that broader context um so generally standard Liv living standards have been challenged but also more specifically
Um in particular areas costs have increased massively has has been noted by by Simon um there’s also been a degree of global and kind of national political change and uncertainty um and that’s had kind of broader Economic Consequences which have fed into a lot of those living standard
Challenges um so I think it’s it’s important to kind of note that context I think it’s Al important to note um uh that all three of these levels are important um I know often the focus is is on the kind of moderate and comfortable levels but it’s it really
Important that we we are concerned with um and find ways of of helping everyone uh live above that minimum standard and we know that growing numbers of pensioners um don’t have what they need for that minimum standard of living um in 2008 n 133% of pensioners in in the
UK were living below that minimum standard um in 2021 22 around 20% are living below that minimum standard that means they’re having to make really difficult choices about kind of what to go without um so I think it’s important to kind of yeah give that context also
As as uh and Simon mentioned I think kind of postco um uh that has had an impact on the ways in which people think about what they want to be able to do in retirement What retirement should look like um and broadly speaking a kind of
Uh a shift from having things uh to kind of doing things and I’ll explore that in in a little more detail in a minute just very quickly to touch on on uh on housing um again because this is an important context um I think there’s a kind of growing awareness that um when
If we fast forward you know 20 years there going to be large numbers of people who are having to pay um direct housing costs through retirement and that will uh have significant pressures on um or significantly increase the amount of uh that people need in to be saving in
Order to have uh you know an adequate stand of living in retirement um and then ac across the lifetime of the research we’ve been doing on minimum living standards there have been significant shifts in expectations um and you can see those feed through across all three levels um
In some interesting ways as Simon pointed to not always upwards um uh but at the minimum in particular I think it’s important to note there has been a a kind of upward movement in expectations and that the minimum uh standard of living that basket of goods that makes up that minimum standard of
Living for people who are retired um looks more similar to the same kind of basket that’s put together for working age people uh than it did in 2008 um so I think there has been broadly a kind of recognition that retirement um you know ideally uh should look a bit more like
Working life um than maybe in the past so context um move on to some principles uh finally get to the slide that you’ve all been looking at for the past few minutes um so there are some key principles underpinning the work that we do um firstly uh the retirement living
Standards build on um as Simon has mentioned um well established publicly defined minimum living standards so work that we’ve been doing since 2006 first published in 2008 and funded by the Joseph rry Foundation annually updates those minimum living standards and they set out what um the public agree it’s
Reasonable to expect um but um people should be able to have as a minimum in order to live with dignity in contemporary uh Society all three of the retirement living standards so the minimum the moderate and the comfortable are rooted in socially constructed definitions of living standards what do we mean by that
Those definitions that that Simon talked through were put together by the public they were not put together by us um this was not us uh as kind of experts in living standards sitting in a room and determining what it is that we think those living standards should look like
Crucially this was based on detailed uh discussions with with lots of groups about how we best describe those three levels um and how we best capture the differences between those three levels um as Simon said if you look at um uh there’s a kind of progression between
Those three levels they Mark points on a Continuum um bringing as you go up um from minimum moderate to comfortable a greater degree of Financial Security for instance um or peace of mind uh not having to kind of uh think necessarily as hard as you would the minimum about
How you’re using the resources that you have crucially um those definitions are the basis for all of the discussions that we have everything we do is rooted in um and shaped by those definitions the retirement living standards capture uh and reflect Norms in the society we find ourselves in now
Um and those norms and expectations change over time um and I’m not going to dwell on that point because uh much of what I will uh come on to say in a minute or two uh really reflects those shifting norms and expectations critically when we get lots
Of people together in groups to think about what it is that um people need to have a moderate standard of living uh in retirement or a comfortable standard of living we’re asking them not to think about themselves but to think about the needs of another so a kind of madeup
Individual or a madeup couple what would they need in order to retire um at these three different living standards that’s important because it’s important to recognize as Simon said um that we all like different things we all have subtly different expectations about the way that life is based on the resources that
We have available a whole number of things um and it’s important that we’re asking uh the groups of involved in this research to think about what it is that all people should be able to have in order to have those living standards this is not a prescriptive set of items
Uh or prescriptive basket of goods and services U we’re not saying for a moment that you must have all of these things in order to retire at this level uh what we are doing is saying actually this represents an amount that would enable you to live at a particular and given
Living standard and that’s really important in all that we do the groups that we get together um are household specific what’s that mean um so at the start of the process we get uh pensioners who are living on their own together and those over the age of
50 to talk about what uh a single retired person would need and we get uh people from couple households together to talk about what they need they need and then we bring them together um they are from across the income distribution that’s important we’re not just having conversations with people um in the
Middle of the distribution about what um life in the middle might look like or people near at the top about what life near at the top might look like um we’re having conversations and discussions with people across the income distribution in order to reach consensus and agreement about what everyone thinks
Actually a moderate stand of living and retirement looks like finally um we don’t just answer the question what um but we answer the question why um and that’s fun fundamentally important as well um there are many other ways of kind of addressing this question how much do you
Need in order to have a a comfortable stand of living in retirement you can look at what certain desiles of the income distribution spend their money on um and from that develop a basket of goods and services that would give you a number um however what that doesn’t tell
You is whether or not any of those things are seen as important what needs they fulfill um how they might enable people to uh participate in the world around them how they might provide a sense of security or or peace of mind to individuals or couples so yes we end up
With detailed lists of stuff uh so baskets of goods and services um but we also end up with reasons and explanations as to why these things are important and why they’re needed uh in order to achieve each of those living standards and also um why those living standards look different to each other
Um so that why uh question is a really really important one uh the next slide please I’ve always wanted to say that so how do we do what we do uh the kind of process um so we work through a series of groups um so groups that bring together
Between eight and 10 members of the public each time um to uh involv in often lengthy uh yes lengthy discussions about um what it is that’s needed at each level the start of that process um is a discussion about those definitions um so at the start of the process in this latest
Research groups together to talk about um whether or not those definitions of a moderate comfortable still rang true um whether or not since 2019 there had been any changes in in kind of uh their shared understanding of what a moderate or comfortable standard of look of
Living look like whether we need to make any tweaks whether those uh the labels that we give to these things um are still appropriate and most useful um that uh discussion and what came out of that discussion kind of underpinned the next set of groups um which were
Looking at what was needed in order to have that comfortable living standard in retirement um the way in which we we do that is bringing together uh again groups of members of the public who are um reflecting on uh so Miz there is the the minimum income standard
They’re reflecting on that that minimum basket of goods and services um and as a group talking through how a comfortable standard of living would look different um so are there uh items or Goods in in that minimum basket but actually you know fulfill that need at a comfortable
Level uh where do things or where might things need to be different and why in order to kind of deliver that that that different living standard that one where there uh there’s that kind of flexibility to do a lot of the things you’d like to do rather than the focus
Being on uh being able to participate in the world around you and not being excluded um so we have a series of groups as as Simon said uh 54 hours of discussion uh in total um across all the groups we do um and uh it’s important I think to acknowledge the participation
Of everyone who took part in the research because um without people giving up their time to come and talk to us um This research would not exist um having done a series of groups to establish what that comfortable living standard looks like um we then feed that forward to another round of
Groups who are looking at um what a moderate standard of living in retirement would look like and what’s needed to achieve that level um and what they’re doing is looking both at um that description of of a living standard at the minimum but also at that description
Of a living standard and what’s needed for a living standard on a comfortable level um and thinking about discussing reaching agreement about what’s needed um for somewhere in between um when we first started this research I hope this isn’t giving too much away um the level between the minimum and and the
Comfortable was was referred to as a level somewhere between the minimum and the comfortable um uh and finally landed on moderate as a label for that the key thing is um and again to kind of you know reiterate that point that this isn’t about uh fixing three points that people
Are aiming at it’s very much about um giving people useful information um rooted in lived experience uh so the lived experience of the participants um to make decisions about the sort of retirement that that they would like um again based on you know their current resources Etc um so but it’s rooted in
That lived experience and that’s that’s crucial um finally a kind of round of groups that reflect on all of the baskets of goods and services together um spotting anything that looks a bit odd next to each other um and resolving and kind of refining those
Lists um and then we do a set of groups uh in London um that are looking at whether or not there’s any differences in those living standards because people are living in London um this Builds on work that we do uh on minimum living standards in London that recognizes and
That knowledges there are some key elements of life in London that are different um some of those are very obvious such as travel uh sorry transport and housing um but there are some subtly different way subtle subtle ways in which life is different in London as well the next slide please so
What do we actually do we walk people around the home so we walk them through the front door uh and we ask them to think about what’s needed for each of those living standards um as we kind of progress around the house uh and that includes uh all of these sorts of areas
So we have conversations about food um both food consumed inside the home uh and food consumed outside the home um alcohol uh clothing um indirect housing costs so not rental mortgage um but what what it is what is it that people need to maintain their property um decorate
Those sorts of things house all goods and services encompasses a whole load of stuff um from teaspoons to towels to saucein um you know uh all or you the vast majority of stuff that we find in our houses um personal goods and services um so haircuts things like that
Uh things that I don’t need um but personal good of services yes health and Health Care um and then transport and then we move outside the home uh and think about what it is that people need um in order to to meet those free living standards um in terms of activities
Things like holidays um but also yeah you know entertainment um and things like that um I think it’s really important again to kind of emphasize that the groups who we bring together to do this take this task very very seriously and kind of carefully consider items um and are enormously methodical
Uh in the in their deliberations um and think very hard about exactly why something might be needed at each of those levels and the reasons why um uh those sixh hour groups at the start of the process are are fairly intense Affairs um uh but they produce you know an enormous amount of
Rich detail next slide please so that’s context that’s how we do it um what are some of the key changes um before I move on to the key changes I wanted to highlight some things that are kind of that come out of this research that that
Make it different to the work we do on the minimum um so one of the things that that’s key here and and always comes up in the conversations we have with groups about a moderate and a comfortable stand of living um are funerals um why am I highlighting that I’m highlighting that
Because it comes out as a critical concern for lots and lots of people not wanting to leave this cost to family members uh not wanting to be a burden um not wanting to to leave that kind of worry on top of you know obviously the concern and worry about about losing a
Family member um that is not something that uh is included at a minimum standard limit um and very clearly kind of points to the different ways I think in which people are thinking about and thinking together as groups uh about how these living standards are different this here in particular we’ve
Talked more about Healthcare than in in kind of previous groups we’ve done as part of this research and part of that I think is is is because of the context in which we’re doing it and the pressures that that currently uh exist within the NHS um both in terms of um accessing uh
Operations and things like that lots of conversations about having your hips replaced um not both at the same time I don’t think um but also the challenges that people face in terms of accessing dentist hisory um there was an announcement about this this morning possibly or or yesterday about making it
Easier to access NHS Dentistry um and for the first time this year groups really carefully considered whether or not private Health Care was needed at any of those retirement living standards um the conclusion was no um but again I think that points to uh the the careful
And considered way in which groups are thinking about these living standards both in terms of the kind of detail of the items but also kind of holistically um if we were to present this does this seem reasonable as a description of a comfortable living standard in 2023 is
It reasonable to expect that people retiring at a moderate living standard should have to pay for Health Care um or does that kind of go beyond right on to the actual changes um the core basket um and again this is something we know from from doing
Research uh in this area for a long time the call of all of these living standards has remained remarkably similar uh and it’s remarkably similar to 2019 um T tows Crockery uh sofas you know the core of stuff that that many of us have um has not changed however um
There have been some key changes and expectations around quality especially at the comfortable level um I’ve mentioned this already but that focus on doing things rather than having things um and a view that you don’t espe need expensive Crockery or expensive cupery at that level in order
To have that living standard that it’ be better to spend or preferable to you know use those resources in different ways to focus on you know eating out um or holidays or those sorts of things um uh at the moderate level um a slightly different Focus um or slightly different
Shift to focus on outside activities and in particular helping others um the next slide please so let’s get into um some of the detail um I part of the problem is I could talk about this forever I won’t talk about this forever I promise um but I am aware of
The time so um what have been the big kind of changes that have had the most significant consequences in terms of the uh expenditure needed to reach each of these levels uh firstly and this will come as no surprise we’ve already mentioned it um I think um and we’re all
Aware of the pressures of increases in domestic fuel or energy costs since 2019 uh so at that minimum level uh since 2019 that Weekly cost of fuel uh for a couple has gone up by 175% at the moderate and comfortable level um it’s gone up by 190% over the
Same period for a single at the moderate level it’s gone up by 290% over the same period so it’s a significant increase um and that does bring with it um uh kind of pressures but also um uh upward pressures in in terms of the amount needed for those living standards the next slide
Please um food costs again something that many of us will be aware of uh the cost of a weekly shop um has increased significantly um and I think it’s something that you know many of us will have noticed as we’re doing that um it has had a particular effect uh at the
Moderate level um part of this is about to is is to do with the revision of the food basket um in 2022 in the work that we do at a minimum I won’t go into a significant amount of detail about this um but there was a revision in how we do this to
Reflect the fact that generally in society um uh I think let me I’ll put it this way body mass index has increased gradually over time um and as a consequence kind of calorie requirements uh of a kind of average person in the UK U have increased uh and that means that
That the amount of food or the amount of calories uh that we we all need as a minimum each day is kind of is increased and that’s had some yes some some uh impacts on the amount of uh food included and therefore the cost of that food um groups also in increase the
Amount particularly at the moderate level um for eating out and takeaways again this is part of that um uh emphasis on activity outside the home but but it was also noted that particularly postco um the cost of eating out and especially the cost of takeaways um has gone up uh
Substantially also uh introduced at the moderate level um is the ability to take others out for food um and again this aligns with that growing concern with helping others out and looking after others um particularly in a context where many working age households as well many pension age households but
Many working age households may be facing real uh pressures on incomes um and being able to do this for your family being able to um take them out for uh that kind of activity when they may have had to um decide that this is something they could no longer afford
Was seen as kind of critically important and a later slide I’ll talk a little bit more about that um next slide please these quotes um kind of illustrate there’s sorts of things we were hearing from groups um so the first one relates to that idea that I’m doing things
Outside the home has become more important than kind of having things with inside the home um and that kind of expectation which was shared across groups um that retirement looked a little bit different to working age and that you should be able to spend more money um on Leisure and eating out and
When you’re a certain age partly because you’ve got more time partly also because there’s a a real recognition that sitting inside the home um spending a lot of time inside the home when you’re retired is not necessarily good for your mental physical health um so going out doing things is seen as critically
Important um and is key to to those definitions as well you know being able to do some of the things you would like to do outside the home as well as in um that second uh quote from a a group in Bristol um really points to the ways in
Which people were thinking about and talking about um helping others or treating others taking them out for food um it’s about being able to do those things for your family or friends um particularly if they can’t afford to pay um uh and often people talked about the the joy of feeding
Grandchildren um if they had them um right next slide please motoring again is an area where there’s been a significant increase since we began in in 2019 in the cost of uh purchasing and running a secondhand car um the cost of buying a second car secondhand cars increase substantially
Over time but as to has insurance for instance um there was a a report recently that put the average cost of insurance um just under ,000 pounds currently for a car um and all of those things are being taken into account when groups are thinking about what it is
That you need at each of those levels um when you take that into account there’s been a significant increase in the cost of Motoring um uh and uh one of the things one of the key changes at the comfortable level was um a shift from the couple having
Two cars to the couple uh having one car groups kind of recognized that actually um in retirement you didn’t need a car each um that that was very much the kind of nice to have at that level rather than something you needed to have so there was a kind of tempering of
Expectations but also a change in the car um from uh a kind of SUV previously in 2019 to a smaller car um in 2023 the next slide please we are nearing the end uh holidays holidays have always been important uh they’ve always been included um at all levels uh and they’ve
Always been included at the minimum you know across the whole time that we’ve been doing that research people have said you should be able to get away from your home um get away from your four walls and since the retirement living standards were established uh in 2019
Again they’ve been a kind of key marker of difference between those three levels uh and a key marker with those different expectations that exist between minimum moderate and comfortable however there’s been a kind of change in expectation particularly at the comfortable level um from two holidays abroad each year to one holiday
Abroad each year um uh yes but they’re still seen as being kind of critically uh important part of uh those those retirement living standards the next slide please clothing um someone in a group I think when we first started noted that you don’t arrive at retirement naked um which is
Very true and that you would bring clothing with you um but that you should be able to carry on buying clothing um looking after yourself um and that clothing plays a really important role in um you know feeling good about yourself um and living with dignity and
That’s true again at all of those levels at the minimum the moderate and the comfortable um there was agreement kind of across all those levels that the cost of clothing has has increased substantially since 2019 um and a clear view this year that there was no particular reason why um
The moderate uh retiring at a moderate retirement living standard should have any less uh kind of resource to purchase clothing than those that are comfortable uh and therefore kind of groups increased those well they made those budgets uh match the next slide please I think I have three more slides
And then I’m done um uh helping others has kind of been a theme throughout um I think it’s important to note here um how important and how crucial this was in kind of the discussions we had this is not just about either covering those kind of discretionary items so uh I
Guess the things that might grandparents might traditionally have been seen to cover like Hobbies or um uh swimming lessons those kind of things but also was very much about kind of helping uh friends and family with everyday costs as a consequence at that moderate level um groups concluded that uh what
Have been included in 2019 750 50 should be increased um to match that comfortable level of ,000 a year um next slide please two quotes that really illustrate uh this point I think um so this woman was talking about uh her children um and the two of them you know
Were were doing okay but one of them really needed that kind of financial support um and that wasn’t about um you know doing nice things for grandchildren that was very much about helping her out with the cost of a food Shop weekly or paying for some bills so it’s very much
About kind of uh stepping in uh and covering those shortfalls that uh you know are a consequence of of the pressures that exist on on households lots of household incomes currently uh the next slide please um this is a a longer one but uh again it kind of points to the
Importance of being able to do that um and uh and why uh why it’s necessary um so the man in the in the second the man there says I think you know the way life’s going he he’s expecting to to have to help children out his children
Out more um and if they have children then they’re grandchildren um because uh things are getting more expensive uh household incomes are being pressured um and uh they may have the resources or should have resources to kind of help uh help out very very briefly um what’s
Next as Simon pointed to um an upgrate next year in 2024 there’ll be new research on the minimum being published in September 2024 um I can’t give any spoilers I’m afraid um but we we’ve almost finished that so it be interesting to see what’s happened to
That again in this context um of a cost of living crisis um and then a review in 2025 and I think it’s kind of important to note that you know living standards don’t always go upwards um and it may well be that there are changes that were
Introduced this time that in 2025 groups feel uh are no longer required thank you right great thanks very much uh Matt um and um let’s now go to some questions we got 14 questions so far and no doubt there’ll be some more um and I expect yeah great thanks gang I expect
Hopefully everyone in the webinar can see uh the panelists and myself um so I’m keing that we try and get through quite a few of the questions um so I’m gonna try and do this in Fairly rapid fire I may even try and answer a few of
The easier ones myself in order to help us do that um and so I’m going to kick off with the one that’s voted at the top from Tessa page and uh she said hi troops we’d love to hear your perspective on what more trusty and sponsors can do on a practical level to
Use the retirement living standards to improve outcomes what great examples are there so I’m not going to drop this on on Matt or Simon um but basically speaking Tessa um this is something we we will make sure we talk about uh at our annual conference in October and you
May be aware that we currently give an award the retirement living standards award to the best use of the retirement living standers by schemes providers and trustees in creating you know interesting and engaging tools um and we’re very keen of course to spread information on that so everybody can
Learn from doing that I have seen a number of these myself um as I’m expect many people on the call have and they do often operate um as um some sort of simple uh fintech type uh thing whereby um an individual can either quite simply
Put in a few details get a sense of what in retirement income they’re going to get and make some adjustments to it and I know the have been rolled out quite widely and I think they’re very effective but I know there’ll be people um on our team who’ll be able to go into
This in more detail so we’ll right back to Essa and in addition uh I’ll be having with my a CO word with my colleagues in events team to make sure that we cover this off uh really well I will just check on whether Simon wanted to add anything that on that point any
Specific cases before we move on yeah I was just going to say I think you know I pointed to the you know the fact that personalization is key to to try and uh make the RS more individualized um so anything that can be done around there
In ter terms of tools we’ve seen some great ones over the years in terms of um applicants to to the awards so there there are plenty of examples around I’m sure we be fing those as Nigel says okay thanks Simon and now I’m GNA go on to a question from Matthew
Webb uh which is a key question that often comes up uh um I won’t read it all uh so he’s he’s complimentary about the initiative but capital letters I imagine most users of this information will compare the figure to their current income figure often not realize this is
An expenditure number so I wondered whether Matt or Simon wanted to explain why we use an expenditure number rather than a frankly an income figure which of course means it has to be well might need to be gross of tax but I don’t know whether Simon or Matt would like to take
That from my perspective it’s kind of it’s the way the RLS was created in terms of of the building blocks of the different items so it’s the concept of the baskets of of goods and activities rather than taking it from the the other angle in terms of from the income um so
I I think it’s it’s simple to understand how that was put together um and I don’t know if it is more easy for people to understand the other way around I don’t know if that’s a particular kind of industry perspective or not open to Matt did you want to add something I think
There are I mean in part it echoes what we do at the minimum which and we produce both so a weekly budget that you would need in order to kind of cover those costs but also what that would mean in terms of an income requirement um I think honestly I think both are
Helpful um uh and this you know does and can be used as a basis for working out what income you would actually need um yeah I mean from our perspective we did we did think about whether we should PR present these making assumptions about people’s tax rates and I mean obviously
People have very simp simple Financial Arrangements I.E the ones that apply to 80% of us uh then you can kind of make some perfectly reasonable assumptions about um whether they be due uh whether they simply be paying income tax on it and at what rate uh but it gets more
Complicated with more complex Financial circumstances uh so that’s why we didn’t do it now that said I do know that many of the online tools that people provide when I say people I mean providers advisory firms and Pension funds um they often provide a button where you can
Kind of have it all quoted to to you based on certain assumptions grow uh or net of tax and I think that is that is a helpful thing and it’s certainly something we’ll be considering um over the next year as to whether we should think about trying to amend them in that
Way okay I’m going to quickly go back to uh the list near the top here let’s see um I’m going to leave leave one to that a little bit complicated to discuss more generally there is a a classic one further down about housing and why we don’t include um mortgage payments or
Rent uh in the RLS and they also ask about uh the percentages on this um as Matt has said this is something that comes out of the uh research it’s very much based on you know what the members of the public think and in this year
Which Matt might talk about a little bit uh more if he wants to is I know there was an active discussion about whether we should start absorbing those within the RS what I will say is when we’ve looked at it separately at plsa we’ve kind of said well right now um it’s the
Case that about 75 uh 80% of people over retirement age are actually uh homeowners uh we do appreciate of course that that the level of home ownership is falling and there may come a time in 20 years when you know maybe it’s going to
Be less than 50% um uh and uh but but because of the method of the research where we rely on what the public think for now we’re not there now on the other hand what um generally on our when we quote the RNs retirement living standard
We do also provide a tool on our website which has which a tells you if you think you’re going to be paying mortgage or rent in retirement and your rent isn’t going to be paid from welfare payments you need to add these figures and we also provide uh a drop- down menu with
Examples of the uh the differences typical rental cost for a one-bedroom flat to bedroom three bedroom or a house Etc in different parts of the country um one of the key the final thing I wanted to sound that before sing if Matt or Simon wanted to add anything is that
It’s pretty hard to make a general assumption about what those housing costs would be because as we all know houses and rents vary enormously uh both in terms of the area and in terms of the size it’s quite hard I mean basically you can choose a figure and it’ll be
Wrong for 90% of people uh but you know again it is something we keep under review and if the the wisdom of the British public feels something should go in there then we’ll be we’ll be perfectly happy to to add it in Matt or Simon did you want to add anything on
This housing plan I was going to say the um PPI pensions policy Institute uh pensions framework research latest analysis showed that if patterns of home ownership amongst today’s 45 to 65 year olds persist through to retirement by 2041 the proportion of households who own their own home reignment could fall
From 78 to 63 so still the majority being homeowners so you know if we put in home um the costs of housing than the RS we’d still be wrong for most people if we if we did that even that far in advance you know we we’ve put on our
Website as Niger says the typical cost there so you know if you do F retiring into a different part of the country there are some typical costs there but quite frankly you know if you’re renting already you’ve got a good sense of how much you pay now you could have a look
At where you’d like to be in retirement if you want to be in a one-bedroom cotage on the out of Sky you could probably find someone like that on right move uh and and find out what the cost of uh rental is there so you know there’s lots of information about
Housing costs going forward yeah whatever we put in as a kind of typical fig I just says it wouldn’t be right for everybody so again it’s about personalization indiv individualization meeting needs and circumstances okay thanks Simon so and just as we started asking questions many many more have
Flooded in so we now have 27 and we’ve only done three or four and we’ve got seven minutes I will just say at this point we will send written responses to all the questions to the people whove who’ve raised them uh and actually I’m very happy that we share these if we can
With everyone who’s taking part in the webinar but moving on and picking out another tricky genuinely hard question for us uh I just see if I can find again yes James cool had a couple of votes expenditure requirements change with age were these changes considered as part of
The research and obviously Matt that is something we have talked about and um I mean just in simple terms the gut instinct isn’t it that this describes uh the kind of things you do during healthy retirement and maybe um my sort of simple you know the first 10 15 years of
Retirement but I think I’m going to go to Matt because I know we’ve raised this point with you and you’ve got something to say on what happens next after that so Matt this is not a this is not a pre-prepared uh answer over to you Matt
There was no no pressure um uh so we did some work uh a few years ago probably a decade ago now looking at the needs in in kind of older of older retired people um and how they were different to the needs of people who just retired at that
Minimum level um and what came out of that broadly speaking was that the resources needed were no different but they were used in very different ways um so you may well need them to make changes to your home for instance um uh to support you as you get older uh to do
Those sorts of things so lots of people talked about um replacing a bathroom with a walk-in shower because the older you get the more difficult it is to climb in and out of the bath have a shower and all of those things bring costs but overall there was a view that
The costs wouldn’t wouldn’t be marketly different it would be really interesting and we have talked about this haven’t we it’d be really interesting to kind of post that question uh to to people who are kind of older and retired so you know above the age of 85 um and to see
How this um kind of resonated with their experience of retirement um but we haven’t done that work yet um but I think you know Nigel sense is is is one that I would kind of broadly align with okay thank thanks Matt and again returning to the questions so another
Tricky one for us um from an anonymous attendee the moderate retirement living standard looks High relative to median earnings which obviously is not part of our calculations it’s based on what the public think and the attendees said does this mean we need to think re rethink replacement rates so the implication of
That is the uh maybe Notions about you know someone on average ears can get by with two-thirds what they had previously is that underplaying it I I would also add a sort of extra question to this and again not pre-prepared Matt um you know I think it’s interesting isn’t it that
In the comfortable Zone we’re seeing the focus groups saying oh we need to ease back a bit but in moderate we saw quite a lot being piled in um so I don’t know I think you know maybe you got any thoughts about what’s happened at the
Moderate level Matt um before we then go on to assume oh all our assumptions about um replacement rates are wrong and we should be assuming people want much more Matt four minutes to go again no pressure um I I think it’s it’s a lot to do with those um the desire to help
Others for instance I think that adds a significant amount I think it is about the increase in costs at the moderate level it is about subtle changes and expectation about um the sorts of things that people should be able to do um and one response to a cost of living crisis
Or one possible response to a cost of living crisis where people are actually having to go without lots of the things that they would necessarily have had before is that kind of well actually I should be able to do these things people should be able to do these things in
Assment one of the responses to covid when people couldn’t you know couldn’t go out or the response was not we don’t to do these things anymore it was actually to recognize the the the value of these things perhaps more than we had before so it’s when you are when those
Things are taken away or when those things are absent and actually their value in in in lots of ways um broadly let’s call it well-being um uh are critically important um so I think it was about helping other people um and also about kind of you know doing those
Things that um maybe at the moment actually aren’t as possible as they were a few years ago okay thanks Matt and then um actually a question that’s not uh not in the 31 questions that are now there which we can’t answer in the next three minutes I’m just gonna um raise
The question of the labels and the titles we use of minimum moderate and comfortable and I just um it’s something we’ve always wondered about and I know that this year I asked you to explore with the research groups what do they think of them uh you know and me being frankly
Entirely open-minded about oh should we should we find different terms Now Matt could you just tell us about what the public thought about the current labels you’re on mute I am mute oh super later didn’t it um broadly speaking um so most of discussion was around moderate um groups felt the comfortable
Was okay actually as a as a kind of and when we we kind of told them some of the things that were included in that they were comfortable with that as a kind of description of what was included that level um moderate because it was a point between the minimum and and the
Comfortable um uh ultimately the confusion of groups was that there’s no really good word for that because any of the words you you start to use like intermediate or adequate I mean adequate implies that the minimum is not adequate um acceptable again implies that the minimum is not acceptable reasonable um
You know we had probably 45 minutes of discussion about whether or not moderate was a use word um and ultimately because or if these things are seen again as like as those kind of points on a Continuum um if the minimum is the kind of is where we want everyone to be um
Where we as a society agree that everyone should be able to you know reach that point in retirement comfortable is you know significantly above that um what do we call the bit in between or the thing in between actually you know that point we’ll call it
Moderate um but as Simon said at the start people may well be existing themselves somewhere between you know the minimum and the moderate um and so you know those I mean labels are you know labels are by their very nature I think reductive um and I think that’s
Ultimately where groups landed yeah okay thanks Matt um well we we we’ve basically pretty much ran out of time um the topics we covered off there did actually pick up quite a few of the other questions didn’t specifically read out as I said we will uh we will write
Back to you uh write out to everyone on those um and there there and just to say somebody said uh is the information up on the website it should be uh and if it isn’t we’ll we’ll make sure it is somebody some people asked about whether’s extra detail yes there’s extra
Detail there there’s not only the onepage summary uh but there is in fact a full report written by Matt and his team which goes into granular level detail um and then in addition I think there’s additional data available uh for organizations that want to uh provide tools finally somebody said are these
Tools generally available a number of the big uh pension providers and advisers do run these tools for their own memberships um I’m Keen to talk to them about whether we can host some of them on the retirement living standard website as well so they are more generally accessible to the world okay
Well with that I think I better finish off I just want to thank uh Professor Matt Padley and uh Simon Saka from uh from the PSA Matt py from ler University for taking part in this I hope everyone who’s who’s uh has found it useful um
And I look forward to speaking with you more about that and answering your questions in the future thank you very much