PI asks a range of experts how retirement saving will evolve over the coming decades

This article was taken from our special Pioneers of DC edition of Pensions Insight.  For case studies of some of the most well-established DC schemes, read the full issue here.



Improved longevity and lower overall levels of retirement saving will make it really difficult to accumulate enough wealth to be able to hang up our working boots at anywhere near current expectations of retirement age.The traditional retirement enjoyed by our parents and grandparents is unlikely to be the retirement enjoyed by our children.

Retirement savings might be just enough to cover when we are physically or mentally unable to work or to top up part-time earnings in later years. So we will need to work longer, at least part-time, to eke out our retirement savings. Companies might need to think about new job roles that are less physically or mentally demanding for us to do in our advancing years.

Retirement savings will need to be far more flexible”

But for a 16 year old, the idea of working non-stop for 50 or more years will be incredibly daunting so maybe retirement, or time outs, will happen for them throughout their working lives rather than just at the end. So retirement savings will need to be far more flexible, pointing to a far wider range of savings in ISAs, LISAs, and shares - not just in pensions.

Let’s hope the government sets out a coherent, sustainable and understandable savings framework to facilitate this.



Retirements will look very different between distinct groups of the workforce. just as it does now. If you are in the public sector you will still be able to look forward to a generous DB pension with a cast-iron guarantee. No politician will ever grasp that nettle - too many lost votes.

If you are in the very large group with minimum provision - just auto-enrolment contributions and an increased basic state pension - your retirement will be as tough as it is now. They must hope for a gradual ramping up of the auto-enrolment contributions as we saw in Australia.

The level of contributions is generally too low”

The position is much less certain for the workers where there is pension provision into an employer’s occupational or contract-based scheme. This will be predominantly DC, and increasingly restricted by relentlessly falling tax allowances – which still have further to go.

The level of contributions is generally too low and the level of engagement around member choices is a struggle. I fear the unrealistic expectations of people in this significant group could well be dashed unless we can raise contributions and win the engagement battle.

As an optimist I always travel hopefully but if we carry on with our current system I see widely different outcomes across the various groups.



Retirement and retirement saving in the future will see greater levels of flexibility and choice.

Gone will be the notion of a targeted income in retirement, as we see with DB schemes or enhanced annuity solutions. DB is on life support currently. In its place will be less pension/retirement orientated savings solutions to cater for employees who will need to work longer and purchase housing later in life.

Trends in Australia, United States, Chile and South Africa will need to be closely scrutinised for best practices to enhance retirement product solutions and to anticipate how consumer behaviours will likely engage with such products.

The key theme will be ‘no one size fits all’ for individuals in forging their own retirement income futures.



Retirement has changed, with many people now taking a phased approach, slowly cutting back the number of hours and days they work. Alongside this, we have seen those approaching retirement given even greater choice and freedom as to how they take an income from their pension pot, be it through income drawdown, an annuity, cash or a blended solution that combines all three.

Retirement has changed, with many people now taking a phased approach”

For people reaching retirement now a significant amount of their income derived from a workplace pension will be from a DB arrangement, but with auto-enrolment, retirees will increasingly rely on DC pensions. As DC pots begin to grow, we would expect to see further innovation in post-retirement solutions along with a more effective advice proposition for the mass market and tools for enhancing member engagement.

The advent of the charge cap has arguably led to a focus on cost within default fund solutions and it is likely that as the market matures and the infrastructure to support the pension system becomes embedded, the focus will shift to the investment proposition. As the market consolidates to fewer pension providers, the investment budget within the member-borne charge may increase which would allow for a greater variety of investment techniques and asset classes to support members’ ability to achieve good risk-adjusted returns.



We are now in the position of having five generations in the workplace from Gen Z through to baby boomers. The diversity of this workforce means that we are starting a fundamental change in the way people will retire and how they save for retirement.

Key to this change will be the way in which people participate in the workforce, and the length of that participation. For Gen Z and many millennials, the reality is that a 100-year life will become increasingly common. To provide these generations with the ‘traditional’ retirement of the baby boomers is unlikely to be a realistic ambition given the conflicting priorities of education, housing and saving.

Auto-enrolment, the flat-rate state pension, the linking of the state retirement age to improving mortality, and the introduction of the Lifetime ISA shows that this new reality is well understood by the government.

Changing career later in life will become more common”

The concept of retirement will disappear. Careers will be much more flexible, with individuals choosing to work longer, save in different vehicles and dip into different pools of savings to suit their personal requirements.

Continuing working, or even changing career later in life will become more common, and individuals may continue saving or choose to use state pension or private savings to supplement employment income.

Expect new products to help people manage this flexibility, with employers emerging to play a role in helping their people manage decisions around the transition to finally stopping work.



Saving for retirement is changing. In the future more people will supplement their state pension with private pensions. We expect up to 11 million more workers to be saving in a workplace pension scheme thanks to automatic enrolment – a great result. While in the past access to a workplace pensions was typically only available for employees of the UK’s large and medium-sized employers, soon small and micro employers will also offer a pension scheme to their workforce.

There will be an increasing amount of choice available to savers”

Despite the increase in workplace pension schemes, people are looking to other lifetime savings and considering working longer to help supplement their later life income.

Pension freedom reforms will also change the way people use their retirement savings. There will be an increasing amount of choice available to savers. And more choice means more complexity, so our role in the pensions industry of helping savers make the right choices and protecting them against scams will become more important than ever.

We’ll need to ensure the retirement products savers are choosing are good quality, and that’s why earlier this year the Pension Quality Mark board consulted on the development of a Retirement Quality Mark and why we are calling for more action to stop pension scams.

This article was taken from our special Pioneers of DC edition of Pensions Insight.  For case studies of some of the most well-established DC schemes, read the full issue here.