Cost-of-living crisis has impact on pension planning

AMID the ongoing cost-of-living crisis, the Chamber is looking to gather feedback from members on the impact of potential increases to pensions contributions and increases to the National Living Wage on businesses in the region.

Businesses are still being impacted by rising costs, and our recent Quarterly Economic Survey from Q1 2024 shows that businesses have been hit by labour costs, the price of raw materials and price pressures around utilities.

The Pensions and Lifetime Savings Association has called for reforms to the UK pensions saving system to ensure savers do not see their living standards fall in retirement. They have recommended that over the next decade, contributions should rise gradually from 8% to 12%.

It is expected that the Government will look at these recommendations and there could be potential increases to contributions.

We are working with businesses to look at the impact of the cost-of-living crisis on people saving into a pension and especially how best to support under-pensioned groups such as the self-employed, women and younger employees to save.

We will also be looking at the potential impact of an increase in pension contributions and what businesses should be doing now to plan. We are also working with the British Chambers of Commerce (BCC) on the impact on future increases to the National Living Wage.

The BCC will give feedback to the Low Pay Commission, an independent public body that advises the government on the rates of the National Minimum Wage including the National Living Wage. We are working to assess the impact of the recent increases on businesses and to understand the impact of a further rise projected to be between £11.61 and £12.18 in 2025.

The importance of the real Living Wage in tackling high rates of child poverty in the North East has been highlighted recently by the North East Child Poverty Commission. This rate is independently

We are working with businesses to look at the impact of the cost-of-living crisis on people saving into a pension

calculated annually by the Resolution Foundation, providing a benchmark for employers that voluntarily commit to go further than paying government-set minimum wages.

The Chamber’s Good Work Toolkit has highlighted the financial benefits that firms such as Hodgson Sayers have reported from becoming Living Wage employers.

We will continue to work with members across all sectors and sizes to understand the impact of the cost-of-living crisis on businesses and ensure that the voice of North East businesses is heard at a national level.