We Must Act Now To Prevent A Real Pensions Crisis Developing In Future

25th April 2023

"If we are to avoid sleepwalking into a future much worse than the present, we need to start acting now." Paul Johnson writes for the Times.

If you happen to be a 66-year-old man, I've got some good news. There's a one in four chance you'll live another twenty-five years. But I have some bad news, too. There's a more than one in four chance you won't make it into your eighties. A few of you will live to be 100. Some won't get as far as 70.

Even if individually we have some sense as to how likely we are to be at either end of that spectrum, that's an awful lot of uncertainty, compounded by the fact that on average we tend to be rather pessimistic. People in their sixties typically underestimate their life expectancy.

That might be one reason why we are so reluctant to purchase annuities — that is, to convert accumulated pension pots into fixed incomes payable until death. Since the annuitisation of pension pots stopped being compulsory back in 2015, there has been a collapse in the number of annuities bought of something like 90 per cent. Hopelessly low payments from annuity products don't help. The typical £100,000 pot will buy an annual income linked to inflation of only £4,000 or so.

Read the full article HERE

Challenges for the UK pension system: the case for a pensions review
This report makes the case for a new review of the pension system in the UK. There are a number of key challenges facing future generations of pensioners that threaten their living standards in retirement and which, without policy action, mean many are likely to face substantial financial difficulties in older age. This is the first report of a multi-year project that will produce the highest-quality evidence regarding the future of financial security in retirement.