A report highlights that the recent pay squeeze has left many of Britain’s 1.8 million older low and middle income households struggling to save for retirement, despite enjoying strong employment growth over the last 20 years.
The report called ‘ A mid-life less ordinary? ’ has been published by the Centre for Ageing Better and the Resolution Foundation ,
The report identifies characteristics and incomes of low to middle income households age 50 to State Pension age.
With the electoral spotlight on households on low and middle incomes (LMIs) across Britain – alternatively known as ‘just about managing’, the ‘squeezed middle’ or ‘ordinary working families’ – the report looks at the living standards of the one in three LMI households headed by someone aged between 50 and State Pension age. Public and political debate has tended to focus on issues facing younger LMI households – such as home ownership, welfare support for children and school provision – often contrasting with the perceived affluence of well-off members of the ‘baby boomer’ generation. But the 1.8 million older LMI households are in neither of these groups and face significant challenges to their living standards at a time when they need to be preparing and saving for retirement.
The lack of attention given to them is all the more surprising given that they are a third more likely to vote than LMI households headed by someone aged under 50.
The report finds that older people in LMI households are:
Working more than ever. Around three in four people in these households are in work, compared to just 58% in 1997-98. Workers aged 50+ have accounted for two thirds of overall employment growth since 2010, including two thirds of self-employment growth. Earning relatively little. Four in five workers earn less than the typical annual salary of £21,000, while half of working women from older LMI households earn less than £12,600. Far less wealthy than their better-off peers . Their typical level of wealth (including housing, pensions and other savings) is, at £245,000, less than a third of the wealth held by higher income households (£825,000) of the same age.
Read more from the Centre for Ageing Better .
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Under-40s picking LISA over workplace pensions – MetLife 12 May 2017
The new Lifetime ISA which was introduced last month is causing many under-40s to rethink their retirement saving plans.
According to research by MetLife (reported by Professional Pensions ) nearly a third of under-40s will cut back on pension saving and instead put money into the Lifetime ISA (LISA).
Almost a quarter (23%) of under 40s said they would reduce the amount they were investing in their pension, while roughly one in 10 (9%) said they actually planned to leave their workplace pension scheme to concentrate on saving into their LISA.
The survey, which canvassed the views of 1,071 employed adults aged 18 and over during February 2017, also found one in five (21%) members of the same demographic admitting they had not heard of the savings product.
Separate research from MetLife, meanwhile, found more than two-thirds (69%) of advisers are concerned the launch of the LISA could deter young savers from investing in pensions - potentially resulting in a two-tier system for retirement planning. Back to Contents
Guaranteed Minimum Pension checker: service availability and issues 15 May 2017
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