Briefing Notes

Briefing Note 38 - What should be the contribution cap for Personal Accounts?

The White Paper Security in retirement describes the need for Government to intervene in the private pensions market to address inadequacy of retirement savings and to encourage and enable private pension saving for those without access to existing provision. There is currently much debate about whether a maximum annual limit should be placed on contributions to Personal Accounts, and if so, what the limit should be. 

This Briefing Note summarises the issues related to setting a contribution cap and presents PPI analysis of the required level of savings for different individuals to meet their target income replacement rates in retirement. It finds that the level of contributions needed to achieve target replacement rates depends on individuals earning profiles.Most earners will need more than the minimum combined default contributions.