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.

Moving from a Triple to a Double Lock does little to long-run state pension affordability

| Observations

An IFS observation.

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Do the rich save more? Evidence from linked survey and administrative data

| Journal Articles

The nature of the relationship between lifetime income and saving rates is a longstanding empirical question and one that has been surprisingly difficult to answer. We use a new data set containing both individual survey data on wealth holdings and administrative data on earnings histories to examine this question. We find, for a sample of English households, evidence of a positive relationship between the rate of private wealth accumulation and levels of lifetime earnings. Even when state pension wealth is included, the top quintile of lifetime earnings have significantly higher wealth to lifetime earnings ratios than the other quintiles. Under this broad measure of wealth, those in the middle of the distribution of lifetime earnings accumulate the least wealth relative to their earnings.

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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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