'Bleak' retirement warning as 7m warned about pension shortfall

The Institute for Fiscal Studies has published a report which concludes that up to seven million Britons are in line for a "grim retirement" due to insufficient pension savings

Millions of Brits face 'grim' retirement as pension crisis looms, a new report warns. A troubling new study from the Institute for Fiscal Studies (IFS) indicates that up to seven million British pensioners could be facing a "grim retirement" due to inadequate pension savings.

The IFS research raises alarm bells over a looming crisis for the UK's current workforce, as many private sector workers may not achieve their desired income levels in retirement.

The report notes that 30 to 40 percent of individuals enrolled in defined contribution pension schemes could experience financial hardship when they retire.

Alarmingly, 20 percent of workers are stashing away nothing towards their pension, and less than half are saving more than eight percent of their wages for their golden years.

To address the shortfall in pension savings, the IFS has tabled a raft of recommendations.

One key proposal is that employers should automatically put three percent of total pay into workplace pensions regardless of employee contributions.

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For those on higher incomes, the think tank advocates for an increased "default" contribution rate of seven percent, to better support middle and higher-earners alongside their state pension.

Laurence O'Brien, the IFS research economist behind the report, issued a stark warning: "Too many private sector employees appear on course to end up on a low or disappointing retirement income."

The IFS's suggested measures aim to shore up pension funds, aiming to secure greater financial stability for more Britons in their later years.

David Sturrock, a co-author of the report, stated: "There is a strong case for almost all employees to receive an employer pension contribution, irrespective of whether they make a contribution themselves."

Mubin Haq, CEO of the abrdn Financial Fairness Trust, commented: "Guaranteeing 3 per cent from the employer regardless of whether an employee makes a contribution could boost employer pension contributions by £4billion per year. This would particularly benefit women, those working part-time, young adults and the low-paid."

Tim Gosling, head of policy at People's Partnership, expressed his approval of the focus on affordability for lower earners, saying: "Workplace pension policy has to work at all points in the earnings distribution."