By Katharine Photiou, Managing Director, Workplace Savings, L&G
The conversation around pensions has never been more saliant. Pension adequacy – the ability to have financial security and an adequate standard of living in retirement– remains a pressing issue in the UK as far too many people are not saving enough to support themselves later in life. For example, L&G research found that young people (adults aged 22 to 32) could see an income shortfall of more than £25,000 a year in retirement if they continue saving at current levels1.
We want to lead by example and take meaningful action, which is why we’ve signed up to become an accredited Living Pension Employer.
The importance of the Living Pension
As an early adopter of the Living Pension accreditation, our commitment will see everyone working at L&G receive a minimum company contribution of 7%. Additionally, when employees contribute 5% (L&G’s default position), the company will match this with an additional 5%, resulting in a total contribution of 17% for the firm’s employees.
L&G has been a Living Wage Employer since 2013, a decision which was driven by our core belief in supporting our employees. Signing up to the Living Pension was a natural next step as we wanted to invest in the long-term success of our people, ensuring that all our employees have the opportunity to achieve better outcomes in retirement.
As one of the UK’s leading pension providers, we’re well aware of the challenges many individuals face when it comes to saving for retirement. Pension adequacy remains a critical issue across the UK, which is why it was important for us to be among the first in our sector to go further – to adopt and champion this initiative to bring meaningful, long-lasting impact.
In fact, our calculations have found that if the average employee were to pay 12% instead of 8% into their pension pot over the course of their lifetime, they are far more likely to be on track for the Pensions and Lifetime Savings Association’s ‘moderate’ Retirement Living Standard, rather than the ‘minimum’. The average pension pot could be boosted by c£10,000 per year2.
Why businesses should make this vital investment
To other businesses considering whether to take this step, we encourage you to explore the Living Pension. The Living Wage Foundation makes the process straightforward and collaborative as they work closely with employers to help build a plan towards accreditation, tailored to each organisation’s structure and workforce.
At a time when financial anxiety is widespread, this is a vital investment into your people and their future resilience. Businesses have a unique opportunity to lead with purpose and by adopting the Living Pension, employers can play a powerful role in addressing pension inequality and build a more secure retirement landscape for all.
We really pleased to be working with the Living Wage Foundation on this important initiative and hope many more will consider getting accredited.
You can join Legal & General and become a Living Pension Employer today.
2 L&G analysis:
Key assumptions:
- Starting salary of £30,000 pa at age 22
- Real investment growth of 3.5% p.a.
- Real salary growth of 2% p.a. to age 40, 1% from 40 to 50, and 0% from age 50+
- Retirement at age 67
- Pension pot translated into estimated income p.a. at retirement using single life annuity, RPI-linked, with 5-year guarantee period. Best buy rates as of 29 May 2025 taken from Hargreaves Lansdown website: Annuity Rates: View Best Annuity Rates from the UK Market
