Pensions and retirement

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.

Retirement incentives and labor supply

| Book Chapters

‘Retirement Incentives and Labor Supply’ in A. Woodland and J. Piggott (eds) Handbook of the Economics of Population Aging, Chapter 1, Vol 1B, Elsevier.

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The ageing population

| Video clip

Why is the UK experiencing an ageing population, and what does that mean for the public finances? Carl Emmerson, Deputy Director of the Institute for Fiscal Studies, explains.

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Would you rather? Further increases in the state pension age v abandoning the triple lock

| Observations

On Tuesday afternoon MPs in the House of Commons will debate the recent report by the Work and Pensions Select Committee on “intergenerational fairness”. This argued that triple lock indexation of the state pension should not continue beyond 2020 and pointed out that, for a given amount of spending on the state pension, there is a trade-off between the level of the state pension and the state pension age. This observation uses projections from the Office for Budget Responsibility to quantify this trade-off.

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