Welcoming the Work and Pensions Committee Report published today and highlighting the need for Government to intervene as millions of people could be heading for an insecure retirement, David Sinclair, Chief Executive of the International Longevity Centre UK (ILC) comments:

“Too many people are heading towards a retirement where they won’t have an adequate income to meet their aspirations. Their situation has been made worse by COVID-19 and now the cost-of-living crisis.

Our 2020 research on Generation X (those born between 1965 and 1980) found that people in this group save just £200 into their pension pots each month and 33% of Generation X are at high risk of retiring with insufficient incomes. We found that at least 1 in 3, or nearly 4.3 million Gen Xers, were set to reach retirement with minimal retirement incomes.

Many Gen Xers aren’t going to benefit from final salary pensions. And there is a sense of hopelessness about how they might turn things around, as pressures mount among the current cost-of-living crisis. Future generations may have even more to worry about.

We absolutely need a timetable to increase the current default auto-enrolment contribution rates. And we need to expand auto-enrolment to the self-employed and auto-escalate employee and employer contributions.

The Government must act on this. A report is just a report until it is acted upon.”

Ends

Contact

Contact press@ilcuk.org.uk or +44 (0) 208 638 0832 for press queries. Spokespeople are available for interview.

Notes

The ILC-UK provided oral and written evidence to the Pensions Inquiry.

Sophia Dimitriadis, Senior Economist, ILC-UK gave oral evidence on 23 March 2022.

Her evidence focused on the ILC’s Slipping between the cracks? Retirement income prospects for Generation X, published in March 2021 with the support of Phoenix Group, calling for urgent support to help this group set to retire over the next 10-27 years.

With many Gen Xers having joined the job market too late to really benefit from more generous final salary pension schemes, yet too early to benefit fully from auto-enrolment into a workplace pension, in addition to suffering disruption to their saving plans due to the global pandemic, many are headed for trouble if policymakers fail to respond promptly.

The report, based on a nationally representative survey, found that:

• Nearly 1 in 3 Gen Xers risk reaching retirement with inadequate incomes.
• 1 in 5 Gen Xers are saving less or spending down their savings as a result of COVID-19.
• Nearly half (46%) of Gen Xers have defined contribution (DC) pensions – but the majority aren’t contributing enough to these.
• The majority of Gen Xers (57%) want to save more for retirement but can’t as they straddle multiple financial pressures, volatile incomes and competing priorities.
• More than 1 in 3 Gen Xers don’t feel confident about planning for retirement.
• The self-employed, renters and carers are among the most disadvantaged.

The calculations in ILC’s Slipping between the cracks report. are based on nationally representative YouGov survey responses of 6035 UK adults aged 40-55 (collected online between 13-24 November 2020). The survey was carried out online. The figures have been weighted and are representative of all UK adults aged 40-55. All references and methods are available in the full report.