Retirement expectations, attitudes and saving behaviour: how have these changed during a decade of pension reforms?

Abstract

Executive summary 5 5.2 How do expected retirement ages vary with other characteristics? 33 5.3 Expected duration of retirement 35 6. Conclusions 37 Appendix A. Additional results 39 Appendix B. The causal effect of private pension automatic enrolment on expectations, attitudes and behaviours 44 References 50 Executive summary © Institute for Fiscal Studies 5 Executive summaryThe last decade has been one of substantial reform to the UK retirement savings environment: the state pension age for men and women has increased, the 'new state pension' was introduced, automatic enrolment into workplace pensions has been rolled out for employees, pension freedoms were introduced and there have been reforms to public sector pension schemes.In this report, we examine how individuals' retirement expectations, attitudes and saving behaviour have changed over the period 2006 to 2017 using data from the Wealth and Assets Survey. The outcomes we consider are not only of direct interest, but may also give a sense of how these reforms will affect individuals' behaviour and retirement outcomes well into the future. Key findingsPrivate pensions are increasingly expected by employees to play a role in providing retirement incomes. There has been a sizeable increase in the proportion of private sector employees expecting to get any income from a private pension in retirement -from 63% in 2013 to 78% in 2017. This suggests that the increase in private pension membership (from 52% to 74% among the same sample over the same period), driven by the introduction of automatic enrolment, does not simply reflect a 'timing effect' of individuals being brought into pension saving earlier than they would otherwise have been. The increase in the proportion of private sector employees who expect a private pension to be their largest income source in retirement has been smaller (+6 percentage points between 2013 and 2017). This suggests that many new members are expecting to receive less from a workplace pension than from at least one other source, such as the state pension, in retirement. Among the self-employed, in contrast, there has been a decline in the proportion expecting to receive any income in retirement from a private pension. This mirrors the decline in private pension membership among the self-employed, which is a trend of ongoing policy concern.Confidence in retirement incomes has increased in recent years, but levels of understanding of pensions and confidence in the adequacy of retirement incomes remain low. Only around half of individuals report that they understand enough about pensions to make decisions about saving for retirement. This low level of self-reported understanding has been persistent over the last decade, despite major pension reforms and consequent discussion of pensions in the media. The proportion of individuals who are confident that their income in retirement will give them the standard of living they hope for increased by 11 percentage points between 2008 and 2017. Despite this, confidence in the adequacy of...

Harnessing the Demographic Dividend in Africa Through Lessons From East Asia's Experience

“…Increased life expectancy and the anticipation of a prolonged retirement are also likely to affect domestic savings rates (Bloom et al 2007;WEF, 2017;Crawford et al, 2020). To the degree that older workers accumulate savings rather than bank on State "pay as you go" pension schemes or family support, a second demographic dividend may arise, provided that savings are productively invested (Mason and Lee, 2006).…”