Pensions & savings Calculating a Living Pension: the 2024 update 4 September 2024 Molly Broome This report sets out the method through which the Living Pension standard – a voluntary savings target that aims to help workers build up a pension pot that will provide enough income to meet basic everyday needs in retirement – is calculated by the Resolution Foundation, and overseen by the Living Wage Commission on behalf of the Living Wage Foundation. The standard sets out the minimum annual contribution rates required throughout working life to reach the level of savings required. These rates provide a benchmark for employers to voluntarily commit to, to ensure their employees are saving enough to have a sufficient income in retirement. This report updates the Resolution Foundation analysis from January 2021 that established a feasible framework through which a ‘Living Pension’ could be calculated. The UK has seen significant changes in the economic context since January 2021, particularly with the subsequent cost of living crisis, which saw inflation reach its highest rate since the early 1980s and a rise in interest rates. This changing economic context means that a number of underpinning assumptions used in calculation of the January 2021 rates needed updating, including: the level of income pensioners will need in retirement; rates of return on pension fund investments and drawdown products; and earnings growth.
