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A double-whammy of pensions pitfalls could spell disaster for retirement for women in their 50s, a think tank director has warned.
Phoenix Insights, a think tank part of Britain’s largest retirement savings firm, has warned inadequate savings and funding caring could leave some with a « nasty shock » over the standard of living they can afford when they finish work.
The finance strategy organisation said research suggests one in seven pension savers are not putting enough aside to stop a major drop off in their lifestyle in future.
Catherine Foot, the organisation’s director, told the Telegraph: “I would say it will be a 2035, 2040 crisis point.
“En masse, future generations of retirees are set for quite a nasty shock when they arrive at retirement and realise they do not have the funds to support the retirement that they’ve seen their parents have, or even people half a generation older than them enjoy. »
Ms Foot added that « most people » in their early 50s and younger were “not saving enough ».
In previous generations pensioners often had large settlements tied to generous schemes determined by the salary someone was earning on retirement.
But the landscape for pensions is changing with a greater proportion now having to rely on how much they saved when they were working.
Ms Foot also explained older members of the current workforce are often caught between supporting parents and their own children, with women being more likely to be in the « eye of the storm » of financial pressures.
The finance expert added that minimum pension contributions should be raised from eight percent to 12 percent and auto-enrolment in pension schemes should be expanded to young people, the self-employed and people on lower incomes.
Speaking earlier this month, the Chancellor Rachel Reeves said she hopes to boost pension pots by £11,000 and unlock billions more in investment with a review of retirement savings.
With pension schemes expected to manage about £800 billion by 2030, the review will look at how they can be encouraged to invest in productive assets such as infrastructure.
As well as supporting the Government’s aim of boosting economic growth, the Treasury said this would also ensure better returns for savers, increasing the average pension pot by more than £11,000.
The announcement follows the inclusion of a Pension Schemes Bill in Wednesday’s King’s Speech, to help savers by introducing automatic consolidation of small pension pots and a value-for-money framework to improve governance.
Rachel Reeves said: « Despite a very challenging inheritance, this new Government is getting on with the job of delivering our mandate to get the economy growing so we can make every part of our country better off.
« The review we are announcing is the latest in a big bang of reforms to unlock growth, boost investment and deliver savings for pensioners. »