Savings

In this Facebook Live event, IFS Research Economist David Sturrock looked at the economics of pensions and the ageing population, answering questions such as how will changing demographics affect public pensions, and what can the government do about it?

Why has wealth accumulation stalled for younger generations? In the case of the 1980s generation, those in their early 30s actually have about 20 per cent less wealth on average than those born in the 1970s had at that age.

Younger generations are accumulating no more wealth in the first decades of their working lives than did those born before them. This is a source of increasing concern. Our research suggests that this lower wealth accumulation need not be due to a change in attitudes among the young - it's not just because they are blowing all their money on avocado toast. Rather it could be because of underlying economic changes - earnings growth has stalled and the returns on savings and housing have fallen. Under these circumstances it is perfectly predictable that younger generations would build up less wealth; indeed, it is reasonable for them to have done so. Given this, policies trying to induce more saving may be counterproductive. The problem is with underlying economic trends, not with the behaviour of young people.

Interest in how the economic circumstances of younger generations compare to those who are older shows no signs of slowing. Politicians on all sides of the debate express interest, or concern, in how trends in UK economy and society are affecting those who are currently in their 20s and 30s in particular. But what does the latest data – which for the first time now allows analysis of those born in the late 1980s – say?

This coming Sunday is Pensions Awareness Day – an initiative to raise awareness of retirement planning.

This weekend the state pension age, for both men and women, rose to 65 years and five months. It will continue to rise every couple of months until it reaches 66 in October next year. Further increases to 67 in 2028 and to 68 a decade or so after that are planned. These increases are the obvious, if belated, response to a sharp growth in life span.

The British economy is going to face a number of big issues over the next fifty years. Whether it is reforming the tax and benefit system, managing an ageing population, or preparing for the workplace of the future, there are plenty of challenges and opportunities ahead.

This report examines how living standards – most commonly measured by households’ incomes – have changed for different groups in the UK, and the consequences that these changes have for income inequality and for measures of deprivation and poverty. In this latest report, we focus in particular on those people who are poorest in society.

A presentation given by Carl Emmerson at the ESRI event Budget perspectives 2020 on 13th June, 2019.

Automatic enrolment: lessons so far

Automatic enrolment is a key government policy to help employees save privately for their retirement. We find that it substantially increased workplace pension participation among those working for small employers by around 45 percentage points to reach 70% of targeted employees – with most, but not all, brought in at relatively low rates of pension saving.

The UK Statistics Authority publishes three headline inflation measures every month. One of them "it knows to be wrong", writes Paul Johnson - this has to change.