More than 10 million people in the UK can currently expect inadequate retirement incomes, according to a report by the House of Lords’ Select Committee on Public Service and Demographic Change.
According to the report, Ready for ageing?, the UK will see a 50% rise in the number of people over the age of 65 and a 100% increase in people over the age of 85 between 2010 and 2030.
The report stated: “To make a success of these demographic shifts, major changes are needed in our attitudes to ageing.
“Many people will want or need to work for longer, and employers should facilitate this. Many people are not saving enough to provide the income they will expect in later life, and the government must work to improve defined contribution pensions, which are seriously inadequate for many.”
It calls on the government to publish a white paper before the next general election that sets out how the society needs to prepare for a longer life and calls on all parties to consider the wider implications of the ageing society.
The report also recommends that the government should establish two cross-party commissions to respond to the ageing society. One would work with employers and financial services providers to improve pensions, savings and equity release, while the other would analyse how the health and social care system and its funding should change to serve the needs of the ageing population.
The report stated: “For many people there is a risk that a longer life could worsen the existing problem of insufficient savings and pensions.
“To help address this, people should be able to work later, if they wish to, often in part-time work. Also, private sector employers, government and the financial services industry must together tackle the serious defects in defined contribution pensions so people get a clearer idea of what they can expect to get from their pension savings.”
The report suggests that people may need to use their housing assets to support their longer lives and urges government to work with the financial sector to support the growth of a safe, easy-to-understand equity release market, with low fees and high-quality standards.
Lord Filkin, chairman of the committee, said: “As a country we are not ready for the rapid ageing of our population.
“The amazing gift of longer life is to be welcomed, but our society and politicians need to address the implications, and the changes needed to attitudes, policies and services so people are best able to benefit from it.
“We need government to support the choices each of us makes for our longer lives: people must be better informed and enabled to get a better idea of the income they may get in retirement from their pension savings; they should be able to work later if they wish to do so.
“The government must set out in a white paper the implications of an ageing society with a vision for living well and independently.
“It should set out how our health and social care services, our pension arrangements and our practices must change to achieve this. All political parties should be expected to consider the wider implications of the ageing society in their manifestos for the 2015 election.
“This is not a distant issue; our population is older now and will get more so over the next decade. The public are entitled to an honest conversation about the implications.”