PensionsJul 30 2014

Today’s workers will be tomorrow’s poor: ILC

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Future generations of pensioners could find themselves in poverty unless the government comes up with a long-term strategy to solve the crisis, the International Longevity Centre has warned.

Ben Franklin, research fellow at the ILC-UK, a think-tank, said: “A combination of high house prices, low levels of saving and working-age poverty presents significant challenges for tomorrow’s pensioners.

“These are long-term problems that require action now.”

In the ILC-UK’s latest “factpack” on demographics and ageing, the think-tank found that during 2012 and 2013, pensioner households were less likely to be on a low income than households with working-age adults or households with children.

This compared with 15 years previously when pensioners were the most likely group in society to be on a low income.

As pensioner poverty has fallen, the proportion of households with working-age adults and households with children living on low incomes has remained relatively stagnant.

Relative poverty among working-age adults without children has increased and, at the same time, the number saving into a pension has dwindled over the past decade, from more than 5.5m in 2000 to 2.5m in 2012.

The ILC-UK’s factpack was developed as part of the #populationpatterns series with the specialist insurer Partnership.

Richard Willets, director of longevity at Partnership, said: “Alleviating pensioner poverty is something we all agree should be a priority. However, rather than simply concentrating on those who are in retirement at the moment, we also need to think about the longer-term future.

“Those who are experiencing working-age poverty at the minute are less likely to be in a position to save, buy their first home and start a pension – all steps that can put them on the road to a more comfortable retirement.

“Even with positive moves such as auto-enrolment, we seriously need to consider how we can do more to solve this problem and avoid storing up issues for the future.”

Key findings

■ For the first time in two decades, a higher proportion of 18-24-year-olds are economically inactive than 50-64-year-olds.

■ The average age of a first-time buyer without family assistance is 33, compared with 30 in 2008.

■ The number of households renting privately has increased 63 per cent since 2001.

Adviser view

Daren O’Brien, director of London-based Aurora Financial Solutions, said: “We are seeing many well-off pensioners, especially those who have final-salary pension schemes. It is concerning that the Retail Distribution Review appears to be stopping those people who need it from getting pension advice.”