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Savings, pensions and wealth

The ageing population is causing fundamental change in the retirement savings landscape in the UK. The state has rolled back from providing earnings-related state pensions in retirement, and the private sector has all but ceased providing Defined Benefit (DB) pensions.  Public sector workers continue to enjoy DB pensions, albeit ones that have been made less generous than those available twenty years ago. Private sector employees have to save for themselves if they want to retire with more than the basic level of income provided by the new state pension, although a steer towards some pension saving for many is provided through automatic enrolment. At retirement individuals now have more freedom over when and how to drawdown the funds they have accumulated in Defined Contribution (DC) pensions. The extent to which individuals understand these changes, and are responding appropriately, is a question of huge importance.

IFS has a long pedigree in research that helps to understand the important issues in this area, such as consumption changes on retirement (for example, in this AER article and in this article), the extent to which state pension provision crowds out private saving (for example, in this AER article and in this QJE article), and the impact of pension incentives on labour market activity (for example, in this chapter in the Handbook of the Economics of Population Aging, in this AER article and in this Economic Journal article). Our empirical findings and expertise have directly informed policy debates. For example, IFS research on the adequacy of pension saving fed into the Pension Commission, IFS formally evaluated the Labour Government’s Saving Gateway policy, and we have recently conducted research into the effects of the increase in the State Pension Age, the introduction of the new State Pension, recent reforms to public service pensions, and the impact of automatic enrolment on saving in workplace pensions.

Going forwards IFS research continues to address important questions such as further work on the effects of introducing automatic enrolment, the impact of the new pension freedoms, the role of housing wealth in retirement, the interaction between social care needs and saving incentives, and the implications of the changing nature of inheritances.

Selected highlights

Report summary
This paper exploits the gradual roll-out of the obligation for employers to enrol their employees into a pension to estimate its effect on how much is saved in workplace pensions for private sector employees.
These slides were presented at an IFS event "Are you prepared for retirement?" on 9 September 2014.
Journal article
This special issue of Fiscal Studies brings together a set of papers on the collection and analysis of household-level data on wealth.
This presentation was given as the IFS annual lecture 2015.


Contact IFS on 020 7291 4800 or [email protected]

David Sturrock
Senior Research Economist
Jonathan Cribb
Associate Director