Pensions Watch 23

¹ See: https://www.retirementlivingstandards.org.uk/
² The RLS are based on independent research from the Centre for Research in Social Policy (CRSP) at Loughborough University, working with 26 focus groups, comprising 249 members of the public, some working, some retired, across 14 locations, representing a variety of social, economic and cultural groupings. See: https://www.retirementlivingstandards.org.uk/developing_rls_research_report.pdf
³ See: https://www.retirementlivingstandards.org.uk/details
⁴ See: https://www.retirementlivingstandards.org.uk/details
⁵ The RLS were updated on 12 January 2023. The cost of financing the minimum standard of retirement living rose 18% for a single retiree and 19% for a couple. That for a moderate standard of living in retirement rose 12% and 11% respectively, while for a comfortable standard of living the year-on-year increases were 11% and 10%.
⁶ The updated London minimum RLS is in the process of being calculated by the PLSA.
⁷ See: https://www.gov.uk/new-state-pension. Currently paid from age 66, a full new state pension requires 35 qualifying years of National Insurance Contributions.
⁸ See: https://www.retirementlivingstandards.org.uk/How-to-estimate-likely-RLS-20230110.pdf. The level annuity rate is assumed to be 6.2% of the DC pot, ie £6,200 of income per £100,000 of capital invested. Given current inflation expectations, an equivalent index-linked annuity rate would be at least 2% lower, ie 4.2% or lower.
⁹ For those living in London the retirement income levels are £28,300 and £41,400 respectively.
¹⁰ For those living in London the retirement income levels are £40,900 and £56,500 respectively.
¹¹ See: Pensions Watch, Issue 8 at https://www.columbiathreadneedle.co.uk/en/inst/insights/pensions-watch-issue-8/
¹² See: Overview of the UK population, 2020. ONS, 25 February 2022. The ONS estimates that in mid-2020, 22% of the UK’s 67.1 million population was populated by those at or over state pension age (SPa). By mid-2041 this percentage is projected to rise to 26% of a population totalling 70.5 million, as the numbers reaching SPa outstrip the growth in net migration and the birth rate and longevity continues to improve.
¹³ In contrast to “the make do and mend and never let anything go to waste generation”, who were either born or who grew up during WW2 and whose real spending in retirement typically declines over time, aspirational baby boomers and early Generation Xers (the sandwich generation) are the first generation in history to be simultaneously caring for ageing parents while helping out financially dependent adult children. They will also be faced with the rapidly declining economics of social care. See: Generating retirement outcomes to be enjoyed and not endured: Why we must harness the opportunities and overcome the risks at and in retirement in a world of freedom and choice. Chris Wagstaff, Columbia Threadneedle Investments, February 2018, pp.24-25.
¹⁴ Those born between 1963 and 1971 currently number more than 900,000 for each of these nine years, while those born from 1972-1976 currently number more than 800,000 for each of these five years. See: Mid-year population estimates, UK. ONS data as at June 2021.
¹⁵ See: Past and projected period and cohort life tables: 2020-based, UK. ONS, 12 January 2022. Also see: Estimates of the very old, including centenarians, UK. ONS, 23 September 2021.