Generation Rent to become Generation Skint
20th April 2023 11:07
by Alice Guy from interactive investor
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interactive investor comments on today's IFS pension report.
“The growth of private renting is a massive issue for future retirees with the risk that Generation Rent gradually becomes Generation Skint, unable to fund the costs of renting in retirement.”
interactive investor, the UK’s second-largest investment platform for private investors, comments on the IFS pension report, out today, and subsequent review, which hopes to shine a light on inadequacies in the UK pension system.
Commenting, Alice Guy, Head of Pensions and Savings at interactive investor, says: “Auto-enrolment has been a roaring success, but pension provision is still woefully inadequate for some workers, with many groups left behind.
“The state pension is much lower than many other European countries like France, and only enough to provide a very basic retirement income. According to the PLSA Retirement Living Standards, it’s possible for couples to survive on the state pension if they are homeowners, but it won’t leave much spare for luxuries or “fun” money. And it also won’t be enough to pay private rental income in retirement.
“The UK pension system relies on workers topping up the state pension by saving regularly into a private or workplace pension. But with the cost-of-living and long-term wage stagnation, its often difficult for individuals to save enough.
“The growth of private renting is a massive issue for future retirees with the risk that Generation Rent gradually becomes Generation Skint, unable to fund the costs of renting in retirement.
“This retirement rental crisis is a ticking time-bomb. ONS figures reveal that 34% of 45- to 54-year-olds were renting in 2022 and 29% of 55–64-year-olds, compared to only 19% of 45–54-year-olds as recently as 2004 and 19% of 55–64-year-olds.
“Self-employed workers are currently falling through the cracks and struggle to save enough for retirement. They often have precarious incomes and need to be able to access savings quickly if their business needs new equipment, or they are going through a rough patch.
“A higher state pension age also disproportionately affects self-employed workers, who are often in manual jobs that are just not possible, or pose significant risk of injury, in your late 60s.”
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