As the UK population ages, it is more important than ever that the UK pension system supports people to provide for their own retirement but also helps those who reach retirement without enough wealth to maintain an acceptable standard of living.
These objectives frequently – and perhaps inherently – conflict. In dealing with the inevitable trade-offs, policymakers need to have three important questions (among many others) in mind.
- Is the financial support offered to pensioners by the state in retirement sustainable in terms of the burden it places on the working population?
- Are the mechanisms by which the private financial sector helps people save for retirement sustainable in the sharing of risk between employers and employees?
- Is the way in which the state and private systems interact sustainable in the sense that the combination promises people a reasonable degree of financial security without creating unduly powerful disincentives for them to work and save?
Our research in this area examines these questions. We look in detail at individual and employer behaviour, and the impact of various actual and proposed government reforms. We also compare experience in the UK to trends seen in other countries with different institutional arrangements.
Between 2012 and 2014, IFS researchers – with support from the Joseph Rowntree Foundation – carried out a programme of work looking at the prospects for future pensioner living standards. This note draws together some of the key findings from that project to paint a picture of the issues facing future cohorts of pensioners hoping to achieve a decent standard of living in retirement.