Collective action from government, the financial services industry and employers could help ensure savers in Generation X do not retire with insufficient funds, a study has found.
The report, published by the Pensions Policy Institute and sponsored by Phoenix Group, said there is still time to take action to stop people retiring with insufficient incomes and joined-up policies was essential.
Generation veXed: solving the retirement puzzle looked at the financial wellness of baby boomers, Generation X and millennials, the risks they face in later life and how policy, industry and employer interventions could mitigate risk.
PPI head of policy research Daniela Silcock said “The decline in defined benefit (DB) provision, reductions to the proportion of state pension people will receive, and an increased likelihood of renting, indebtedness and giving or receiving care in retirement mean members of Generation X are at greater risk of reaching retirement with an income that is not adequate, or sufficiently sustainable or flexible.”
She explained that while Generation X would reach state pension age over the next 12 to 18 years there is “still scope” for government, industry and employers to take collective action to “mitigate the risks”.
“The government could consider whether benefits could be restructured to ensure that those renting in retirement don’t lose out on means-tested benefits, such as housing benefit, reducing both the incentive to save and disposable income in retirement.”
She added the financial services industry should innovate with products which combine sustainability and flexibility, which appeals to consumers, such as a drawdown and annuity hybrid product, could reduce the sustainable retirement income gap.
The report said employers could support those who need to provide care, or develop health problems, to continue working and contributing to their pensions by allowing flexible working, encouraging shared parental leave, and providing retraining opportunities for workers who need a more sedentary position as they age.
Silcock added: “While individuals may need to take more responsibility for ensuring that they are fully prepared for retirement, government, industry and employers will each play a critical role in ensuring that the future system provides individuals with all of the tools they need to secure a suitable retirement income.”