Preparing for later life; working longer and saving more
In our ageing society, encouraging people to prepare better for later life by saving more and working longer is an important area of government policy. The barriers to achieving this, however, are particularly marked for low-income households. Those in low-paid and low-skilled work face constraints to saving and are more vulnerable to early exit from the labour market. Attitudes and expectations about later life also diverge according to life stage and generation.
This mixed methods study conducted on behalf of the Joseph Rowntree Foundation, comprising depths, groups, stakeholder engagement, workshops and a survey, provides a picture of the barriers and opportunities facing those in low-paid and low-skilled work in relation to preparing for later life, and considers the policies aimed at supporting this group to work longer and save more.
The research found that:
- The cost of living was cited by participants as a major barrier to saving for later life. With many struggling with day-to-day finances, saving for the future was considered out of reach. Low earnings and insecure work reduced opportunities for pension saving.
- Most participants accepted that they would need to work longer; indeed many felt that they would not have the necessary funds to retire. Older workers were concerned about the barriers to working in later life.
- Ideas for increasing opportunities for flexible hours – and enshrining this in legislation – were welcomed by participants, as were measures designed to retrain or upskill older workers.
- Life stage and generation were important factors in determining expectations and attitudes to saving. For example, the high costs of raising a family were highlighted by those who felt there were trade-offs between saving for their pension and short-term saving (for example for Christmas) and helping their children financially.
- In relation to savings policy, participants supported the idea of linking pay increases to contribution increases, simplifying pension information, and redistributing pension tax relief so that a higher proportion is directed towards those on lower earnings.
