Royal London Research the Future of Pensions

Last month, London’s largest mutual insurer, Royal London, published a comprehensive review of the UK Government’s pensions strategy.

Filled with original research, the report is a worrying window on the future of retired life in the United Kingdom. Here our expert Hertfordshire financial advisors summarise and comment on the report’s finding.

A Worrying Savings Deficit

The big headline of the report is that the average saver will need a fund of £666,000 to retire to the same standard of living as today’s retirees enjoy. This figure is shockingly juxtaposed by the amount actually saved for retirement by those aged 30-40: a mere £14,000.

What this means is that the majority of those aged 18-40 are not on track to surpass their parents’ retirement levels of wellbeing. This is big news since living standards have generally risen progressively throughout the last century.

Making Up the Deficit

State Pension

One place current-day savers could look in hope for boosting their retirement income is the state pension.

If the Government’s triple lock scheme (where the pension is assured to increase in line with whichever is highest out of wages, inflation or 2.5%) continues, we may assume pensioners can look forward to a state pension of at least £1,558 per month by 2050. That’s up £904 per month on today’s £654 pay-out.

So can today’s workers rely on the state in future? The reports suggests a strong “No”. The average monthly expenditure of today’s pensioner is £1,084. But in 2050 it is estimated to be £2,764. That means the state pension will actually fall from covering 60% of expenditure to merely 56% by 2050.

Further, 40% of 30-40 year olds believe it is somewhat or very unlikely the state pension will even exist in 2050. So it seems savers would be wise to look to other sources of income for their retirement.

Work Pensions

The coalition government’s Automatic Enrolment legislation has seen workplace pension membership jump from 32% to 49% in the private sector. The report finds the scheme to be beneficial in ensuring that more people contribute towards a workplace pension.

The scheme is aimed at ensuring more people start contributing to their pensions early on. It’s success in increasing numbers suggests that more and more people will have contributed more and more to their pension savings by 2050. However, at such an early stage, it remains unclear how much benefit will be seen, both by the Government and the retiree.


The report’s overwhelming conclusion is that the coalition’s pensions freedoms policy has raised awareness of the problems that the country will face by 2050 in terms of being able to afford its pensions expenditure.

Although people now have more options upon retiring than simply buying an annuity, this freedom requires good advice for it to be used to the benefit of the retiree. The most important thing is to educate the younger generation of the importance of saving for retirement early on in life.

Read the whole report here.

For professional advice on retirement and planning you and your family’s financial future, get in touch with one of our Hertford Financial Advisors today. Call 01992 500 261 or email us at

This article is for information only and must not be considered as financial advice. We always recommend that you seek independent financial advice before making any financial decisions. Investments can go down as well as up and you may get back less than you invested.