More than 5 million Britons retiring in the next two decades will be beset by ‘inadequate’ pension pots (and it won’t get any better until the 2050s)
- Four out of ten people who retire this decade will not have “sufficient” income
- New data shows that 5.6 million people who retire in the next 20 years are not saving enough
Two million Britons retiring this decade will be hit by ‘inadequate’ pension pots – rising to an eye-popping 3.6 million by the 2030s, new government figures show.
The Department for Work & Pensions today released an analysis of future retirement incomes showing that 5.6 million people in England, Scotland and Wales are not saving enough for retirement.
Four in 10 of the 5 million people who retire in the 2020s are not expected to have ‘sufficient’ income after housing costs to maintain their standard of living.
And this figure is expected to rise to 44% for the 2030s and 2040s, before falling to 36% and 33% in the 2050s and 2060s, respectively, according to DWP figures.
In the 2040s and 2050s, 2.8 million people will not have adequate retirement income, excluding housing costs. And this is expected to drop to 2 million by 2060.
Two million people retiring this decade will have ‘inadequate’ retirement income after housing costs, rising to 3.6 million by the 2030s
The DWP analysis shows that 13 million (39%) people aged 22 to state pension age (currently 66 but approaching 68) are not saving enough to maintain their standard of living in retirement.
And a total of 4.1 million (12%) people of working age are not saving enough to meet the retirement income needed to retire, even at the minimum.
This decade, 800,000 people (14%) are expected to fall short of the minimum retirement income standard, rising to 1.1 million (13%) by the 2030s.
Projections suggest that 900,000 (13%) will fall short of the minimum income level in the 2040s – while this will remain at the same level (though at a lower rate of 11%) in the 2050s, before falling to 600,000 (10%) in the 2050s ). 2060s.
This revelation comes as the DWP announced tonight that the lower income limit for automatic participation in occupational pension schemes would be dropped and the age limit would be lowered from 22 to 18 as the government backed a private bill for members. by Tory MP Jonathan Gullis.
The department said lowering the auto-enrollment age to 18 “will make saving the norm for young adults and allow them to start saving from the start of their working lives.”
Graph showing the percentage of people of working age who will have an inadequate pension by ten years of retirement
They said lifting the lower income limit will “better support those with low incomes and multiple jobs by ensuring they save from the first pound earned.”
Pensions Minister Laura Trott said: ‘We know that these widely supported measures will make a significant difference to people’s retirement savings in the coming years.
“In doing so, the government will fulfill our commitment to growing the economy and supporting the hard-working people of this country, especially groups such as women, youth and lower income earners who have historically found it more difficult to save for retirement.” .
Jonathan Gullis MP said: ‘The automatic enrollment of pensions will benefit many young people in all corners of the country, which is why I am delighted that Pensions Minister Laura Trott is supporting the bill.
“With all the evidence of the huge positive impact it can have, it’s a good idea that we should now expand auto-enrollment to people aged 18 and over. I am convinced that this law will make a huge difference to people from Kidsgrove to Consett.”