The Institute for Financial Studies (IFS) is running a multi-year review into pensions and long-term financial security for retirement in the UK.
The IFS made the announcement in a report on the challenges in the UK pension system, saying its final report will include "specific policy recommendations and options".
The pensions review will "assess the consequences of current pension policy, the economic environment and individual behaviour for living standards in retirement", the IFS said.
The review will focus on three key questions:
- Are people saving enough for retirement, and how can Government policies help?
- How should the state support people working later in life and through retirement?
- Do people need assistance using their wealth appropriately throughout retirement?
The IFS has scheduled the pensions review for the summer of 2025 and launched its first report earlier this month.
The IFS said:
"This major review will assess future risks and determine what needs to be done to secure decent retirement outcomes for current working-age generations."
"It may seem odd to launch such a review when the current generation of pensioners is doing better than any in history. But in a new report to launch the review, we warn that this success may be blinding us to the challenges facing future generations."
Key findings
In its first report, the IFS identified some major concerns that are fuelling the ongoing review.
According to the IFS, almost a fifth of working-age private sector employees (around 3.5 million people) don't save towards their pension in any given year.
Furthermore, 61% of savers are contributing less than 8% of their income - far less than the recommended 15% - the report found.
The IFS also found that fewer than one-in-five self-employed workers are saving towards their pension, particularly those who have been self-employed for a long time.
High rent prices
The IFS has also said that an increasing number of people nearing retirement age who live in houses or apartments with expensive and unsecured rental agreements may struggle to pay into a pension.
At the age of 65, only 3-4% of those born in the 1930s and 1940s lived in privately rented housing, compared with 6% for those born in the 1950s and "what looks likely" to be 10% for those born in the 1960s, according to the IFS.
Pension advisor states triple lock has been ‘wiped out'
Echoing the IFS's concerns, pension advisory company Canada Life warned that the triple lock has been "wiped out" by rising food and energy costs.
Andrew Tully, technical director at Canada Life, commented:
"Pensioners will be feeling apprehensive and worried, despite the triple lock increase adding £972 a year to those fortunate enough to receive the full state pension.
"This is a difficult time for many but especially those households on fixed incomes, typically pensioners. Ensure you or your relative is claiming all of the financial support to which you or they are entitled, for example, pension credit."
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