PensionsMar 3 2021

Dashboard urgently needed to help GenX in retirement

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Dashboard urgently needed to help GenX in retirement

A pension dashboard and better signposting to advice are "crucial" to helping people save more for retirement, experts have claimed

A panel, hosted by the International Longevity Centre UK yesterday (March 2), looked at problems facing the Generation X cohort in retirement.

It followed the publication of 'Slipping through the cracks?', a 103-page report from the ILC UK, which suggested solutions to the current problem whereby one in three Gen Xers risk reaching retirement with inadequate incomes.

The panel, which also included FTAdviser senior editor Simoney Kyriakou, explored options to make pension saving more understandable, with information more readily available and accessible.

Speaking on the panel was Jonathan Reynolds, shadow secretary of state for work and pensions, who said: "For this generation, they have high expectations of consumer access and transparency... I don't think anyone thinks this situation is adequate at the moment. 

"The dashboard has to be a fulcrum of the answer to this - certainly the answer to the small pots issue whereby people are doing a lot of jobs and having lots of small pots."

The ILCUK report found that a combination of exponentially rising house prices, low wage growth, high job uncertainty and a low availability of defined benefit pension schemes have combined to put pressure on those born between 1965 and 1980 in particular.

The report found even those GenX who are saving into a pension are often not putting enough into a pension to secure a liveable income in retirement.

Reynolds said: "Getting good advice to people at the right price is crucial; I also think robo-advice can play a much bigger role in financial advice, to signpost people into the kind of things they should be considering, and providing information to help them."

Reynolds also made a point around transparency, saying consumer information on pensions has to relate to climate change and sustainability, which was becoming more important to GenX and to subsequent generations.  

The information provided by the dashboard needs to be used alongside other sources of information and other modelling tools. Chris Curry

According to the report, carers in particular face affordability barriers to saving, mainly because providing care – but also poor health – limits their ability to work. Paying for care costs also affects some carers.

The report said: "12 per cent of all our Gen Xers currently provide care to an adult every week, rising to 15 per cent of those aged 50 to 55.

"Carers may be considerably disadvantaged in retirement, with 56 per cent worried about their lifestyle in retirement."

The report also found care responsibilities negatively affect employment and that carers are significantly more likely to say they want to save more but struggle to do so than non-carers (67 per cent vs 56 per cent), mainly because they can’t afford to (56 per cent vs 49 per cent). 

The report suggested: "Allow individuals to share their annual allowance for pension contributions with another person who is unable to contribute to their own pension, e.g. due to caring responsibilities or poor health".

Resilience

Also on the panel was Chris Curry, director of the Pensions Policy Institute. "If we look at the financial resilience of GenX, the pandemic has really highlighted this," he said. He spoke of the affordability issues and the need for people to have a mix of long-term and short-term savings.

He welcomed the comments on the dashboard in the report, saying these will be an "important part" of pension planning in the future from 2023, but said: "These are not a solution in themselves.

"The information provided by the dashboard needs to be used alongside other sources of information and other modelling tools and capability to allow people to make the best [decision]".

Referring to recommendations in the report to perhaps encourage increases to contributions, based on salary increases, Curry said: "There is a real desire to see contributions through auto-enrolment increase but we need to look at a combination of offers.

"Auto-escalation is an interesting idea; it is already possible at the employer level but the government may want to think about how they can encourage that to happen.

"However it works best when there is engagement with individuals, so we need to be careful to ensure there is an 'opt-down'."

Fellow panellist Andy Curran, chief executive of the Phoenix Group, commented: "It is really important that we do bounce off things such as the dashboard, and digital innovation that will help people follow what is happening with their pension and get them engaged.

"This will build up a level of interest across society as a whole as people focus on how their pensions are getting on, and how their contributions are building up."

Reynolds added: "Advice and action on scams also has to be part of this. When it comes down to someone's pension savings, it will ruin your life if you fall victim to a pension scam."

He called for more to be done, as part of a wider regulatory and industry measure, to help deal with financial crime in a much tougher measure.

simoney.kyriakou@ft.com