City firm Herbert Smith Freehills is amongst the first businesses to become ‘living pension’ employers, committing to higher contributions to ensure a minimum standard of retirement living. The scheme, promoted by the Living Wage Foundation, sets up a savings target of 12% of annual salaries, of which the employer pays at least 7%. 

Research by the Resolution Foundation suggests that around four in five employees – and 95% of those on low pay – are not saving ‘at a level likely to reach an acceptable standard of living in retirement’.

On average, workers would need to save £3,000 a year to meet the Living Pension target, calculated using a basket of basic household goods and services based on the minimum income standard.

Firm claims 'living pension' first

Source: iStock

As a member of the scheme, Herbert Smith will be enrolling new employees at a higher employer and member contribution rate. Existing employees will be given the option to ‘opt-up’ to help them save more.

The firm provided pro bono support to the Living Wage Foundation to help launch the new employer accreditation scheme, including technical advice on the development of the living pension standards and drafting the employer licence agreement.

Executive partner Alison Brown said being a ‘responsible employer is about more than ensuring staff are looked after whilst they work for you. It is about recognising that providing employees with stability and security in retirement is just as important.'

Noting that individuals will face occasions when their financial planning needs change, she said the scheme will retain flexibility, enabling participants to voluntarily increase or reduce contributions as needed.

‘We are proud to have been able to support the Living Wage Foundation in launching this important initiative, which will hopefully benefit hundreds of thousands of workers around the UK, including our own,’ Brown said.