The document discusses retirement incomes for current and future generations in the UK. It finds that while current pensioners have seen strong income growth, future pensioners worry they will not receive the same benefits from the state. Reforms over the past 15 years, including an increased and more generous state pension, linking the state pension age to longevity, and automatic enrollment in private pensions, have helped stabilize the system. Projections show replacement rates will remain below benchmarks for most, though will improve for women. Outcomes depend on continued reforms and economic conditions remaining stable.

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As good as it gets?
Retirement income for current & future generations
Lord Adair Turner, Chairman of the Institute for New Economic Thinking
Baroness Jeannie Drake, Member of the House of Lords and trade unionist
Professor Sir John Hills, professor of Social Policy at the LSE
David Finch, Senior Economic Analyst at the Resolution Foundation
David Willetts, Executive Chair of the Resolution Foundation
@resfoundation

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Pensioners have experienced strong income growth in
recent years
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But future pensioners are worried that these outcomes won’t be
replicated for them
“The [state] retirement age just keeps getting extended and
extended. I still don’t have a pension. It will just get to a stage
where you just have to pay for your own retirement – there won’t
be anything from the government. We won’t get anything – not
by the time we get to 65 or 70.”
Millennial
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Similar anxiety led to formation of the Pensions Commission 15
years ago, which has driven the current policy agenda
• Near universal, more generous flat-rate state pension
• State Pension age linked to rising longevity
• Automatic enrolment into private pension saving aimed at low to middle
earners
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The Pensions Commission also set out benchmarks for the share
of pre-retirement earnings ‘replaced’ by retirement income
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Greater availability of longitudinal data allows the
calculation of actual replacement rates for current retirees
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Greater availability of longitudinal data allows the
calculation of actual replacement rates for current retirees
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Looking ahead, State Pension is set for near universal coverage
and restoration of its value relative to median earnings
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Looking ahead, State Pension is set for near universal coverage
and restoration of its value relative to median earnings
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Auto-enrolment has, so far, led to a big rise in private sector
pension scheme membership, especially among women…
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…and the low paid
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…and the low paid
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Adequacy for future pensioners

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We project gradually rising pension income for women at
State Pension age in future
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…and broadly stable pension income for men, despite a
dip for generation X
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A higher financial return on DC pension pots would provide
boost to overall incomes
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Across all future pensioners replacement rates broadly
follow the pattern for current retirees
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Across all future pensioners replacement rates broadly
follow the pattern for current retirees
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Across all pensioners replacement rates fall below Pension
Commission benchmarks
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For women replacement rates are generally improved
compared to current retirees
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For women replacement rates are generally improved
compared to current retirees
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Among men there is a clear dip in replacement rates for
generation X
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Projections are always uncertain, outcomes are sensitive to
shifts in policy and the economy
• Triple lock
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Projections are always uncertain, outcomes are sensitive to
shifts in policy and the economy
• Triple lock
• Lower coverage
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Projections are always uncertain, outcomes are sensitive to
shifts in policy and the economy
• Triple lock
• Lower coverage
• Weak growth
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Conclusion
• Reforms have stabilised the system, with DC replacing DB provision over
the long term (but risk higher for individuals)
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Conclusion
• Reforms have stabilised the system, with DC replacing DB provision over
the long term (but risk higher for individuals)
• Deep pessimism surrounding future provision is overdone, though some
way to go to meet Pensions Commission benchmarks
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Conclusion
• Reforms have stabilised the system, with DC replacing DB provision over
the long term (but risk higher for individuals)
• Deep pessimism surrounding future provision is overdone, though some
way to go to meet Pensions Commission benchmarks
• Next few years are a crucial phase for success of auto-enrolment, not
helped by weak outlook for real wage growth
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Conclusion
• Reforms have stabilised the system, with DC replacing DB provision over
the long term (but risk higher for individuals)
• Deep pessimism surrounding future provision is overdone, though some
way to go to meet Pensions Commission benchmarks
• Next few years are a crucial phase for success of auto-enrolment, not
helped by weak outlook for real wage growth
• Importance of pension saving greater for future generations given
slower build up of other wealth and a key consideration for the
Intergenerational Commission
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As good as it gets?
Retirement income for current & future generations
Lord Adair Turner, Chairman of the Institute for New Economic Thinking
Baroness Jeannie Drake, Member of the House of Lords and trade unionist
Professor Sir John Hills, professor of Social Policy at the LSE
David Finch, Senior Economic Analyst at the Resolution Foundation
David Willetts, Executive Chair of the Resolution Foundation
@resfoundation