Have we saved enough? Do people approaching later life have an adequate retirement income?
This report explores different measures of adequate retirement income and proposes a series of recommendations to improve financial security for people as they approach later life.
Despite recent reforms to improve the adequacy of retirement incomes many people approaching later life are set to be financially ill-equipped for a good later life. The challenge of defining an adequate income is a fundamental challenge to UK pensions policy and we need to reach a settled consensus to obtain buy-in from government, employers, industry, unions and individuals.
Compared to previous decades where more people were in more financially secure defined benefit (DB) pension schemes, 2 in 3 employee contributions are now in defined contribution (DC) schemes. Around 90% of all DC savers are at risk of not achieving a decent replacement rate – the proportion of their pre-retirement income that their pension provides.
This insight report is based on independent research the Centre for Ageing Better commissioned from the Pensions Policy Institute. The two charities have signed a Memorandum of Understanding and will work together with a shared goal of a society where everyone enjoys their later life. The alliance will initially focus on adequacy of income in retirement and the impact of COVID-19 on financial security in later life.