‘Sleepwalking into a retirement crisis?’

The Institute for Fiscal Studies has launched a wide-ranging review of the pension system, looking at whether people are saving enough for retirement.

 
James Jones-Tinsley, Self-Invested Pensions Technical Specialist at Barnett Waddingham comments: “It takes a long time for pension saving to show through in pensioners’ incomes; by its nature, it only becomes evident after a full working life – often several decades. Therefore, if pensioners have been doing well since 2009, this is likely a result of their historic defined benefit pensions, or ‘final salary schemes’, which grant a significant and sustainable income through retirement. It cannot be directly related to the successes or failures of auto-enrolment, which only came to pass in 2010.“Looking to the future, the levels of defined contribution mandatory contributions remain far too low to offer members a ‘decent’ pension in retirement. And the self-employed are already two steps behind employees, in that they have no employer contributions to help increase the size of their pension pot, plus there is no auto-enrolment equivalent for them. Many people aren’t in any form of workplace pension scheme; they are relying mainly or solely on the state pension.”The IFS is correct that workers in the future do not have a comfortable retirement ahead. Many people will need work longer and retire on less. We are sleepwalking into a retirement crisis; significant policy change is needed, and quickly.”