How When You Were Born Impacts Pension Cash

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If you were born between 1966 and 1980, you are most at risk of reaching retirement with too little money to fund your lifestyle, according to the latest research.

As a member of Generation X, you are likely to have had your finances ravaged by renting a home, debt or giving and receiving care, says a study by experts at the Pensions Policy Institute.

The PPI’s latest report Generation veXed: solving the retirement puzzle looks at the financial wellbeing of people born since the end of World War 2 and concludes that Generation X needs help from the government and employers to ease their financial plight.

Reasons for pension problems

Daniela Silcock, Head of Policy Research at the PPI said: “The decline in defined benefit 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.

“While Generation X, will be reaching state pension age over the next 12 to 28 years, there is still scope for government, industry and employers to take collective action to help mitigate 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.

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Help from employers

“Industry could help mitigate the risk of reaching retirement with less income that increases with an inflationary index and pays out until death. 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.

“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.”

The PPI is an independent think-tank based in the UK.

Download the full report Generation veXed: solving the retirement puzzle

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