The future looks dangerous at best for many workers hoping for a comfortable retirement


According to the Institute for Fiscal Studies (IFS), several key challenges threaten the living standards of workers who want a comfortable retirement.

Private sector defined benefit (salary-linked) pensions have continued to decline over the past two decades, according to the IFS, and contributions to defined contribution plans are typically low.

Pension liberalization has given people more flexibility in their retirement lives, but now individuals, not employers and insurers, bear the risk of poor investment performance and uncertain longevity. often, the report added.

IFS has partnered with the abrdn Financial Fairness Trust, a charitable trust that funds activities to address financial issues and improve the living standards of low- and middle-income people, to launch a pension overhaul. bottom.

“We need a major overhaul of pension provisions now to give them the opportunity to avoid a future that looks worse than it does now,” it said in a report Thursday.

The report added: “While current pensioners are still doing well on average … the future looks treacherous at best for many current workers who want a comfortable retirement.

The review will produce a series of reports on the challenges facing future generations of pensioners over the next two years, with the main phase ending in summer 2025.

At age 65, only 3-4% of those born in the 1930s and 1940s were living in private rental housing, compared with 6% of those born in the 1950s and 6% of those born in the 1960s. is likely to be 10%, IFS said.

Unless a wave of inheritances leads to an increase in homeownership, this proportion could be even higher among younger generations, leading to disappointingly low standards of living in retirement and increased reliance on housing benefits, he added.

According to the report, raising the public pension age poses challenges and the improvement in life expectancy is not as great as predicted a decade ago.

However, with the Office of Budget Responsibility forecasting an increase in national pension and pensioner benefit spending from 5.6% to 9.6% of national income by the early 2070s, the pressure on public finances is already considerable. says.

IFS Director Paul Johnson said:

“But there is a risk that this will foster complacency among policy makers. Automatic enrolment has brought millions into workplace pensions, but in many cases the savings rate the Pensions Board thought was necessary. The savings rate was much lower than

“Despite the significant increase in the number of self-employed people, far fewer are saving in pensions. Most private sector workers have to manage considerable risks. Especially when it comes to the time until retirement, it can be incredibly difficult to strike that balance.

“And more people are likely to spend their retirement in relatively expensive and less secure private rental housing, which will negatively impact both their retirement standard of living and the government’s housing benefit bill. UK Retirement It has been long overdue to revisit the savings landscape.”

Alistair Darling, Member of the Pension Review Steering Group and Chairman of the abrdn Financial Fairness Trust, said:

“But today, a lot has changed and the landscape is very different. Too many people are saving too little for retirement.

“Many self-employed people and those with precarious jobs do not have pensions. be connected.

“Today, many pensioners are doing well on average, and pensioner poverty has been greatly reduced, but we avoid a future in which too many do not have enough to afford in their old age. It requires a major overhaul.”

Phil Brown, policy director for the National Pension Provider People’s Partnership, said:

“This study supports growing evidence that the majority of UK workers are not saving enough for retirement. consensus.

“We hope the IFS review will help chart a path to improving the country’s fiscal resilience.”

A Department of Work and Pensions (DWP) spokesperson said:

“We also support proposals to expand automatic enrollment, helping millions of people save faster. It is especially beneficial for groups that have found it difficult to

“Additionally, a series of measures announced in January included talks on ensuring that pensions provide value for money, helping savers enjoy the retirement they’ve worked so hard for. We will be able to improve security and generate better returns.”

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