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Industry organisations have welcomed plans for a major review of the UK pension system, raising concerns that savers could be "sleepwalking into a retirement crisis".
The Institute for Fiscal Studies (IFS) announced plans for a comprehensive pensions review in partnership with the Abrdn Financial Fairness Trust, after its report, Challenges for the UK pension system: the case for a pensions review, raised concerns around the risks facing future generations.
The report was welcomed by industry experts, with People's Partnership director of policy Phil Brown suggesting that the review has the potential to help build the consensus needed to reform the UK pension system.
“This research adds to the growing body of evidence showing that the majority of British workers are under-saving for retirement. What’s currently missing is a societal consensus on how we reverse that trend," he stated.
“We hope that the IFS’s review will help chart the path towards improving the nation’s financial resilience.”
Barnett Waddingham self-invested pensions technical specialist James Jones-Tinsley agreed. "We are sleepwalking into a retirement crisis. Significant policy change is needed, and quickly,” he said.
This view was echoed by Phoenix Insights director Catherine Foot who argued that it is "vital" that the retirement income prospects of future generations are taken seriously, warning that policy decisions are needed soon.
"Gen X are the next generation fast approaching retirement and are typically characterised by lower levels of home ownership and lower rates of final salary pensions than the Baby Boomers preceding them," she continued.
"This ‘forgotten generation’ also won’t benefit for a lifetime of saving under auto-enrolment, leaving many at risk of running out of money in retirement at current saving levels.
“We have less than 10 years before this really starts to bite, so we need to make the right policy decisions soon to improve the prospects of retirement living standards."
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