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Major review into pensions launched to address declining retirement savings

NewsMajor review into pensions launched to address declining retirement savings

A two-year review into pension reform is being launched to stop middle-aged workers being left struggling to make ends meet when they retire.

The 20 year decline of salary-linked pensions and low contributions have left many workers on course to be poorer than over-65s are now, according to the Institute for Fiscal Studies.

It warned that falling rates of pensioner poverty may be “blinding us to the risk that future generations will not fare as well”.

The IFS said the future “looks risky at best” for many workers hoping for a comfortable retirement.

It has launched a major pensions review with the abrdn Financial Fairness Trust, a charitable trust which funds work to tackle financial problems and improve living standards for people on low-to-middle incomes.

Former Chancellor Lord Darling said: “Too many are saving too little for retirement.Many self-employed and those in insecure work don’t have a pension.” 

“Increasing numbers are living in the private rented sector, which will lead to higher housing costs in later life.”

“Whilst today, many pensioners are doing well on average and pensioner poverty has been cut drastically, we need a major review to avoid a future where too many won’t have enough to live on in their old age.”

The IFS found many employees are saving very little for retirement, with 60 percent of middle-earning private sector employees saving less than eight percent of their earnings. Nearly nine in ten are saving less than the roughly 15 percent of earnings.

Paul Johnson, director of the IFS, said there was “complacency” among policy makers after recent pension improvement.

He said: “Most private sector workers are left having to manage considerable risks – not least over how long their retirement will be – which for many will be incredibly difficult to balance well.”

“And an increasing number are likely to spend their retirement in relatively expensive, and less secure, private rented accommodation which will have adverse consequences for both retirement living standards and the government’s housing benefit bill.”

“A fresh look at the UK retirement saving environment is long overdue.”

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