Developments in Employee Benefits law and practice

21 August 2017

Weekly update on new developments in the pension industry for week ending 21 August 2017:No more ‘carriage clock retirement’| Workers want minimum automatic enrolment contributions to increase | Private pensions cold calling, including emails and text messages, is to be banned | Today’s retirees 46% worse off than those retiring in 2007

No more ‘carriage clock retirement’

The majority of people in the UK believe that they will not have enough money to maintain their desired lifestyle in retirement, according to new research from The People’s Pension.

In a poll of over 4,000 people, conducted by YouGov on behalf of The People’s Pension, more than half (52%) of UK adults who are planning on retiring, expect that their financial situation will not support their desired lifestyle in retirement. Therefore, many are looking to other sources of income to fund their retirement. Almost four in ten (39%) said that they would be working part-time, more than a quarter (27%) said that they would be looking to downsize their property and 24% said that they will rely on receiving inheritance from family and friends to support them financially.

Recent changes in State Pension age seem to be adding to the lack of certainty about how people will fund their financial future. Following the Government’s announcement that it will bring forward the rise in the State Pension age, more than half (52%) of UK adults who are not already retired, admitted they are unsure at what age they will start receiving the State Pension.

Most strikingly, even those closest to retirement age seem to be in a real monetary muddle. Although unaffected by the most recent State Pension announcement, almost one in five (18%) non-retired people aged 55 and over said that they didn’t know at what age they would start receiving a State Pension, while over half (55%) admitted they didn’t know what the full State Pension weekly rate currently is. 

Less surprisingly, the problem of a lack of pensions understanding is significantly worse among young people, with 93% of 18 – 24-year olds not knowing the State Pension weekly rate and 83% not knowing when they will be able to receive their State Pension. However, the research shows that the younger generation are realistic when it comes to when they expect that they will retire. 31% of respondents between the ages of 18 and 24 said that they will likely retire aged 65 – 69 while 23% said that they would likely be aged 70 or over before they retire.

Darren Philp, Director of Policy and Market Engagement at The People’s Pension, said:

“This research confirms that the concept of a “carriage clock” retirement, whereby people completely stop work and rely on their pension savings is consigned to history. Instead, people appear to be planning for a phased retirement, where they may choose to work part-time, or surviving on uncertain funding sources such as an inheritance or property. Most worryingly, these “precarious pensioners” are not solely the generations of the future but include those over 55, many of whom may be unprepared financially for imminent retirement.”

The People’s Pension has created a simple five-point plan to help those in workplace pensions take steps to improve their retirement outcomes. 

Workers want minimum automatic enrolment contributions to increase

According to new research from the DWP, over 80% of workers who qualify for automatic enrolment believe a workplace pension is good for them. 

Moreover, 79% said increasing both employee and employer contribution levels would also be good for them - with just 6% disagreeing.

The findings were almost unanimous across different demographics, including sex, social grade and age. Workers between ages 22 and 34, and 55 and 59 were the least supportive of increasing contributions, although only marginally so at 76% and 75% respectively.

The research, conducted by Ipsos Mori, involved face-to-face interviews of nearly 1,500 employees aged between 22 and state pension age who earn over the AE earnings trigger of £10,000.

Private pensions cold calling, including emails and text messages, is to be banned

The government has confirmed new measures to protect private pension savers from the threat of unscrupulous pension scammers. The measures will include:

  • a ban on cold calling in relation to pensions, including emails and text messages
  • a tightening of HMRC rules to stop scammers opening fraudulent pension schemes
  • tougher actions to help prevent the transfer of money from occupational pension schemes into fraudulent ones

The cold calling ban will be enforced by the Information Commissioner’s Office (ICO).

The government is also tackling scammers by ensuring that only active companies, which produce regular, up-to-date accounts, can register pension schemes. Limiting transfers of pension pots from one occupational scheme to another will mean trustees must check their receiving scheme is regulated by the Financial Conduct Authority, or has an active employment link with the individual, or is an authorised master trust.

The announcement comes as new figures show almost £5 million was obtained by pension scammers in the first five months of 2017. It is estimated that £43 million has also been unlawfully obtained by scammers since April 2014, with those targeted having lost an average of nearly £15,000, as scammers try to encourage savers to part with their money with false promises of low-risk, high-return investment opportunities.

Today’s retirees 46% worse off than those retiring in 2007

The Daily Telegraph reports that, based on research from Fidelity, a typical pension pot in 2017 would be able to produce an annual income of only £6,607, only just over half the £12,193 retirees in 2007 enjoyed. The analysis compares the 10 years before 2007 – the year when Northern Rock imploded and the US investment bank Bear Stearns realised it was in trouble – with the past decade.


John W. Wilson LLB(Hons) FPMI ACII, Head of Research| Email:

Stephen Williams, Senior Research Consultant | Email: