Gen X pension shock: 7.5 million Brits heading for poverty in old age—Reform voters hit hardest
Caught between the end of final salary schemes and the late arrival of auto-enrolment, a generation is sleepwalking towards a retirement shock, and most won't see it coming until it's too late
More than seven million Britons face a catastrophic retirement crisis. That is the bleak conclusion of a new report by the Social Market Foundation think tank, which reveals that a staggering 54 per cent of Generation X—those aged between 46 and 61—have inadequate savings.
Reform voters exposed
But it is the report’s political findings that are the real eye-opener. A full 55 per cent of Reform voters in the Gen X age group are projected to suffer a brutal “pension shock”, the highest of any party’s supporters. Green Party voters are a close second, with 53 per cent facing the same grim fate.
The irony could not be starker. Reform voters are the most vulnerable but are supporting a leader who clearly has no interest other than lining the pockets of his dodgy donors and polluting paymasters and who will no doubt hang them out to dry.
And critically, most of them do not even know it yet.
A cruel trap
The report, based on a survey of more than 2,000 Gen Xers carried out by polling company Survation, paints a picture of a generation caught in a uniquely cruel trap.
Born too late to enjoy the gold-plated defined benefit pensions their parents enjoyed—the ones that guaranteed an income for life—Gen X were already decades into their working lives when auto-enrolment finally arrived in 2012. By then, most had spent years contributing next to nothing to a pension pot that was never going to be enough.
The result: 39 per cent will retire unable to maintain their current standard of living, while 35 per cent face incomes below the bare minimum needed to cover basic necessities, currently set at just £13,400 a year.
For roughly two million in the generation, there is no safety net whatsoever: no property equity, no savings, no investments, nothing to fall back on.
A slow-moving avalanche
Gideon Salutin, Chief Economist at the Social Market Foundation, did not hide his alarm: “This generation now approaching retirement forms a slow-moving avalanche,” he warned, “Millions are heading for a retirement without the income they expect. Without action, their retirements will be meagre. Despite many of them working longer than their parents and making more money than their parents, Gen X is in for a substantially worse retirement.”
The regional picture is equally grim and will enrage anyone who believes the North-South divide has been ignored for too long. Nearly half of all Gen Xers in the North East—49 per cent—are projected to fall below even minimum retirement living standards, compared to just 19 per cent in London.
They don’t know what’s coming
Perhaps most alarming of all is how many people simply have no idea what is coming. Half of all survey respondents said they expected a higher retirement income than projections show they will actually receive. A remarkable 57 per cent said they do not regularly think about what retirement might cost them, and a mere 11 per cent have ever sought financial advice.
Catherine Foot, Director of the Standard Life Centre for the Future of Retirement, which sponsored the research, issued a stark warning: “Gen X are at the sharp end of a building retirement crisis. While today’s retirees are better off than previous generations, this trend is set to go into reversal within the next decade and into the 2040s. There is a relatively short window now in which to act.”
The report calls on the Government’s Pensions Commission to raise default auto-enrolment contributions from the current 8 per cent to 12 per cent, and to urgently expand free financial guidance to the millions who need it.
For the millions of Reform voters who thought the system had failed them on immigration and the cost of living, the pension timebomb is about to make it feel a great deal more personal.