The findings from the IFS paint a stark picture about the future of retirement, revealing that those aged between 50-70 who left the workforce in 2020-21 are more likely to end up in poverty than those in any of the previous years.
“With people now spending a third of their life in retirement, as an industry and with Government we must remove the significant hurdles and unnecessary barriers that stop meaningful pension contributions being made throughout a person’s working life.
“While pensions may not be the first priority for people, they are a vital piece of the jigsaw for any long-term financial wellbeing. The problem with our current pension system is that it was designed for traditional patterns of work. It is not suited to help employees who take significant career breaks, work in multiple or part-time roles, or frequently move between jobs. A lot of these groups reach retirement with an over-reliance on the state pension to provide them with an income in retirement, with some groups such as carers, receiving 72% of their retirement income from the state pension.
“Getting more people saving via automatic enrolment would be the most effective way to start closing the current pension savings gaps faced by the UK’s underpensioned. The Department for Work and Pensions announced earlier this year that the age of mandatory auto enrolment will be reduced to 18 from 22 and that a mandatory 8% contributions to earnings will be applied from the first pound of earnings. These are important steps in the right direction to help people make meaningful contributions and support savers in the longer-term.”
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