Pension saving over the lifecycle

This project will provide new insights into how individuals change their pension saving behaviour over their lifetimes.

There is concern that many individuals are not making adequate financial preparations for retirement. Automatic enrolment has been successful at increasing pension membership, but a lifetime of default contributions will not be enough for many, and not everyone is covered by automatic enrolment. Existing evidence shows that the self-employed, who are not covered by automatic enrolment, and women working in the private sector are particularly likely not to be making adequate provision.  

Discussion among policymakers and industry is now turning to whether, and how best, to further influence individual saving behaviour to improve outcomes. This is an important debate, but there is a risk of policy being formed in a vacuum, based on little evidence of how individuals currently change their pension saving behaviour over their lifetimes.

Using individual panel data from the Annual Survey of Hours and Earnings (ASHE) and the HMRC Self Assessment (SA) dataset covering 15 years, the Wealth and Assets Survey and the UK Household Longitudinal Study this programme of quantitative analysis will provide evidence on how pension contributions evolve over the lifecycle. Descriptions of big picture patterns, will be accompanied by detailed analysis of what is  driving the trends – examining how pension saving changes as individuals age, as their earnings change, and as their wider circumstances (such as household composition and financial commitments) evolve. The project will also examine the role of earnings volatility and explore how pension saving behaviour differs in particular groups of interest and concern, namely women and the self-employed.

Findings from this research will be highly relevant for those attempting to assess the ‘adequacy’ of individuals’ current saving, and for those seeking to design effective policy interventions, including policymakers in government, industry bodies, pension providers, consumer groups and other researchers.