How can today’s pension savers prepare for tomorrow?

A new report calls for a more flexible attitude to pensions and saving so people can develop greater financial resilience.

Savings & Pensions


People will need more flexible types of saving and possibly early access to savings to weather financial shocks and to fund reskilling or starting businesses, according to a new report from the Pensions Policy Institute.

The briefing report calls for more support to develop people’s financial resilience and says savers will need to be more agile and flexible to cope with the changing needs of the labour market, including increased casual employment, while also planning and preparing for later life. It adds that changes to labour and pensions policy could ensure more people save into a pension during working life.

The report covers a range of areas from housing [for instance, the likelihood that more pensioners will live alone], higher living costs, increased renting in old age, funding for long-term care needs, the need for preventive healthcare and the impact of technology on the pensions sector, including automation, to greater flexibility in how people work and retire.

The report says the Covid pandemic has led to increased unemployment and reduced financial resilience in many households and has also reduced trust in financial services, but it states that there has been no significant change in people’s engagement with pensions as a result of the pandemic.

Nevertheless, those in jobs have increased their saving and it states that financial capability will increase over time due to increases in the proportion of adults who are digitally included. It states that those most likely to have low financial capability are women (60%), people over age 65 (37%) and people with no formal qualifications (28%).

There is a warning for younger savers, with the report saying many will struggle to be able to afford to save sufficiently in order to meet later life needs and says Covid has increased debt levels among young people who need more accessible information about saving, better financial education and more support around more complex savings decisions as well as products that are able to meet unpredictable needs and non-linear pension savings, for instance, by facilitating increased contribution levels when members are in full-time work in order to make up for time out or periods of casual working.

The report also says that future pensioners are more likely to be supporting adult children and grandchildren.

It highlights the need to continue reducing the gender and ethnicity pay and pensions gaps and to support education and retraining for those out of work or between jobs. It also calls for increases in the generosity of carers allowance and care-related benefits which it says could help to ensure that those leaving work early to provide or receive care are less likely to need to access their pensions early.

The report concludes that individuals need to be supported to re-consider working life and retirement and develop greater resilience, be more open to moving jobs and acquiring new skills and be more creative about finding and staying in work; that industry needs to adapt its products and services to facilitate the new world; and policymakers need to look at pensions policy that is “fit for purpose for the future life”.

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