Living standards will fall for many over 50′s in the UK because of insufficient pension saving according to data compiled by the Pensions Policy Institute. Their figures are based upon the English Longitudinal Study of Ageing data which estimates that only 40% people aged over 50 will have enough income in retirement to reflect their current standard of living. A further 10% could meet the required standard but only if they were to work and save right up until the age when they become eligible for the state pension. An additional 5% of over 50′s would have to work and save for up to 10 years past the state pension age, with a massive 45% having to work for an additional 11 years to reach the same standard. With the state pension age rising to 66 by 2020, this could mean millions of workers working until they are aged 77.
The data also found that around 85% of those over 50′s who are working today would have enough retirement income to reach a minimum income standard of £11,000 a year, but only if they continued working right up until the state pension age. However they found that to be comfortable in retirement most retirees would need an income of at least 50% of their gross working income. Another concern is that whilst many workers may need to work past the state pension age, many could find that they are unable to do so as the level of unemployment in that age group has been rising sharply. There are nearly 120,000 over 50′s who have been out of work for more than two years, which is a rise of 45% on the figure 12 months ago. Many of the efforts that the government has been taking to help alleviate unemployment has focused heavily on youth unemployment which is perceived as more of an issue than over 50′s unemployment. Michelle Mitchell from Age UK says that..”…”…the Government must encourage employers to hire and retain older workers, and to provide training for those who need it, if we are to avoid creating future generations of people struggling in later life.”
Joanne Segars from NAPF says we need to encourage greater pension saving so that people make more provision for themselves in retirement. She added that means testing pensions was acting as a deterrent adding that the system needs to be more generous than at present. Although auto enrolment is being rolled out later this year, many strapped for cash workers are likely to opt out of the scheme, leaving what some observers are calling a ticking time bomb of a future pension crisis.