Just half of older workers are on track for ‘pension adequacy’, according to Hargreaves Lansdown’s savings and resilience barometer
Using data from this survey, HL looked at whether people’s pensions are on track to deliver a fixed percentage of their pre-retirement salary, typically two-thirds of salary.
This is a different measure of ‘retirement adequacy’ than the one used by Pension UK. Its retirement living standards look at whether retirement savings will deliver a fixed amount to cover ‘basic’ or ‘moderate’ living costs.
The HL report shows that only 45 per cent Generation X household and half of baby-boomer households are on track for pension adequacy. This number falls even further for younger savers, with just 38 per cent of Millennial and Gen Z households currently on track to meet this goal.
However HL says this situation improves when other assets, such as Isas and wider savings, are taken into account. Using these additional assets 53 per cent of Gen X household and 58 per cent of baby boomers should have retirement savings that cover two-thirds of their pre-retirement salary.
Hargreaves Lansdown head of retirement analysis Helen Morrissey says: “There is still much to be done to improve our retirement resilience and the pensions gap continues to loom large.
“Younger age groups will of course benefit from having been auto-enrolled into a workplace pension for the majority of their working lives. They will have the opportunity to boost their contributions over the years to get them closer to their goal.
“The same can’t be said for older age groups who were not auto-enrolled and may not have started their retirement saving until much later and have less time to make up any gaps.”
But she adds that when taking Isas and other savings into account long term resilience rises across all generations. “For those closest to retirement, we see resilience surge to 58 per cent of households being on track – though it’s fair to say there is still much to do.”
Morrissey says that people need to be given more information on boosting retirement adequacy. This will include information on tracking down lost pensions, making the most of employer matching schemes and the importance of boosting contribution rates, particularly when people get a pay rise or start a new job.
