The Institute for Fiscal Studies is calling for and conducting its own pensions review in the face of mounting future risks for those now in work.
The future looks risky at best for many current workers hoping for a comfortable retirement, according to a new report published by the Institute for Fiscal Studies, which is launching a Pensions Review in partnership with the abrdn Financial Fairness Trust.
The report highlights the continued decline of defined benefit (salary-linked) pensions in the private sector, the abolition of state earnings-related pensions, low interest rates, falling homeownership, low typical contributions to defined contribution schemes and a fall in pension saving among the self-employed. It adds that the introduction of pension freedoms has given people flexibility but means there is no longer the same degree of longevity-risk-sharing that defined benefit pensions and annuities provide. It says individuals, rather than employers or insurance firms, now bear the burden of the risk of poor investment performance and uncertain lifespan.
Calling for a major review of pension provision, it outlines some specific risks:
The IFS is leading a new multi- year Pensions Review, in partnership with the abrdn Financial Fairness Trust. It will examine the effects of changing economic conditions and public policies on the future of financial security in retirement, including how these effects differ by gender, ethnicity and across the UK.