[Source: Reuters]

The minimum amount that workers and employers in Britain put into pension pots should be raised to help plug a retirement cash gap between men and women, and boost investment in productive assets, pensions consultant Mercer said on Wednesday.

Britain’s new Labour government has announced a review of the pensions industry to give people more value and create bigger cash piles to invest in infrastructure and green technology to raise returns and economic growth.

The government should consider increasing – in stages – the minimum “auto-enrolment” amount for defined contribution (DC) schemes to 12%, from 8% at present, which could result in an extra 10 billion pounds ($13.21 billion) of contributions annually, Mercer said in a reform “road map”.

This would help plug the “gender savings gap” whereby women currently retire with an average pension savings of 69,000 pounds, compared to 205,000 pounds for men, due to reasons such as women taking career gaps to have children or part-time work.

There were calls last year to raise minimum contributions to about 16%, but with little progress as Britain faced a cost of living crisis.

Cash-strapped Britain has to rely heavily on private markets to boost investment.

Mercer and ten other pension and insurance companies such as Aviva, Legal & General, Aegon and M&G under the Mansion House Compact (MHC), voluntarily agreed last year to invest 5% of their defined contribution pots in unlisted companies by 2030, up from just 0.36%, or 793 million pounds, at present.