New Pensions Report From IFoA Published

Some feedback from IFoA after the latest UK Govt review on Pensions;

The Institute and Faculty of Actuaries (IFoA) is encouraged by the first report from the Pensions Review led by the Institute for Fiscal Studies and Abrdn Financial Fairness Trust. The ongoing review will assess the consequences of current pension policy, the economic environment and individual behaviour for the future of living standards in retirement.

Leah Evans, Former IFoA Pensions Board Chair and IFoA representative to the ‘Pensions Review’ advisory group, said:

“As a contributor to the work of this Pensions Review, we support the holistic evaluation of the future of state pension provision in the UK. It must be a priority for policymakers to ensure the state pension remains sustainable and affordable over the long term. The 10.1% rise implemented in April 2023 was an important step to ensure that pensioners in the UK do not fall into poverty – particularly post the onset of Covid-19 and ongoing cost of living crisis. 

“It is fundamentally important that pensioners are not left behind with a stagnant state pension. However, as today’s workers become tomorrow’s pensioners, the challenge for the state pension is that it must remain fair, sustainable, and future proof. The report directly addresses how this can be achieved with recommendations on target levels, longevity considerations, and living standards which build on the strengths of the current system.

“This is a positive development in the ongoing public debate on the state pension age and payment levels. However, the reality is that the state pension alone is not enough to provide UK households with a comfortable retirement. Addressing this pension saving adequacy challenge will require a long-term focus on issues like automatic enrolment, advice and guidance and managing longevity risk. The IFoA has highlighted this in its recent policy prospectus, ‘Beyond the next Parliament: The case for long-term policymaking’.

“UK pensions policy has benefitted enormously from long termism in the past, demonstrating that it is possible. The 2004 Pensions Commission led to the establishment of automatic enrolment in the UK – arguably the greatest single success in pensions policy in the last 25 years. We urge government to embrace this modern consensus building work within the ‘Pensions Review’ and meaningfully consider the recommendations in this report on the future of state pension in the UK.”