The case for a pensions review

Challenges for the UK pension system

The Institute for Fiscal Studies and abrdn Financial Fairness Trust

April 2023

The report, published to mark the launch of the Pensions Review, finds the future looks risky at best for many current workers hoping for a comfortable retirement.

The last twenty years have seen the continued decline of defined benefit (salary-linked) pensions in the private sector, the abolition of state earnings-related pensions, low interest rates, falling homeownership, low typical contributions to defined contribution schemes, and a collapse in pension saving among the self-employed. The introduction of pension freedoms has given people flexibility but means there is no longer the same degree of longevity-risk-sharing that defined benefit pensions and annuities provide. Individuals, rather than employers or insurance firms, now bear the burden of the risk of poor investment performance and uncertain lifespan.

We therefore need a major review of pension provision now in order to give us a chance of avoiding a future that looks much worse than the present.

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