A comprehensive new report looks back at how pensions have evolved over the past 50 years… and looks ahead to what savers and investors should expect in the next decade.

The Pensions Policy Institute (PPI) has released “A 50-Year Retrospective”, sponsored by Capita Pension Solutions, to mark its 50th anniversary.

As well as analysing how economic, demographic, and technological changes have transformed pension schemes and retirement planning in the UK over the past five decades, it looks ahead to 2034.

Critically, it identifies developments that will impact on people’s ability to achieve adequate retirement living standards, including increasing life expectancies, a workforce that will likely include greater proportions of women, older people, and flexible workers, as well as the likelihood of a generation of renting in retirement due to high house prices.

Key highlights from the report include:

• The shift from Defined Benefit to Defined Contribution schemes: In the past, Defined Benefit (DB) schemes provided a predictable income throughout retirement. However, the shift towards Defined Contribution (DC) schemes means that individuals now bear more responsibility for their retirement savings, which requires savers to be more proactive in managing their pension pots and making informed investment decisions to ensure a comfortable retirement.
• Impact of legislative changes: Legislative changes, such as the introduction of automatic enrolment in 2012, have increased pension participation rates, bringing more people into pension saving. There are, however, ongoing challenges for example, around adequacy and gender wage disparities, which can negatively impact women’s retirement savings.
• Rising house prices and homeownership challenges: For many in the UK the dream of homeownership has become increasingly difficult to achieve, leading to a higher likelihood of renting in retirement. This trend adds financial strain to pension savings, making it crucial for people to plan for higher living costs in their retirement years.
• Balancing Work and Caregiving Responsibilities: The report highlights the need for policies that support flexible work arrangements and caregiving, ensuring that individuals can save adequately for retirement while managing their caregiving duties.
• The impact of technology: Technology has evolved beyond recognition over the last 50 years and future technological advancements will have a crucial role to play in improving outcomes and how pension schemes are managed. These developments will create new opportunities to engage with members, with AI tools providing more personalised information.

Shantel Okello, Policy Researcher, The Pensions Policy Institute said: “As we look ahead, addressing the challenges of balancing work and caregiving, improving contributions in pension savings, and ensuring adequate retirement income will become increasingly important.”