How to run a country: pensions

Document type
Report
Author(s)
Mosseri-Marlio, William
Publisher
Reform
Date of publication
18 June 2015
Subject(s)
Poverty Alleviation Welfare Benefits and Financial Inclusion, Older Adults
Collection
Social welfare
Material type
Reports

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Pensions policy poses a significant, albeit slow burning, challenge for the new Government elected in May 2015. The Department for Work and Pensions estimates 11.9 million people are undersaving for their retirement. Meanwhile demographic shifts will see yearly expenditure on the State Pension and pensioner benefits grow by 1.3 per cent of GDP between 2015-16 and 2064-65. This is bad news for both public finances and the wellbeing of pensioners. Action is needed, but caution is also called for. The full implications of policies affecting retirees take generations to emerge, people need time to be able to prepare for their futures, and retirement needs can be complex and varied. When navigating these challenges, the Government should be guided by three principles. Pension policy should:

  • Provide a framework for everyone to sustain a healthy level of wellbeing in retirement by alleviating poverty and helping savers meet their aspirations.
  • Extend choice to those who seek it, while recognising varying capabilities and the need to design regulatory frameworks which support decision-making.
  • Create a financially sustainable system that does not undermine the wellbeing of future citizens through the crowding out of other public services or accrual of debt.

This report sets out the steps policymakers could take to realise this vision.

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