The retirement landscape in the UK has changed significantly over the last 50 years:
• In 1978, the State pension moved from what was largely a flat rate benefit to a combination of flat rate and, for employees only, earnings-related State pensions.
• Over the years, the earnings-related element underwent a variety of changes, mostly benefits (and government costs) until in 2016 it was replaced by a new flat rate benefit.
• Final salary (defined benefit – DB) pension schemes were widespread in both the private and public sector in the 1970s and 1980s, with personal pension plans largely limited to the self-employed.
• Years of attrition followed, and by 2025, only 3% of private sector DB schemes were still accepting new members, while about three-quarters were no longer accruing benefits for their existing members.
• From October 2012, automatic enrolment (AE) in workplace pensions was phased in, reaching a final steady state from April 2019. Workplace pensions of various types now cover about four-in-five employees and other workers, but not the self-employed.
The decline of final salary pensions
From that history emerges a theoretical gap for those who started their working lives roughly in the fifteen years from the turn of the century. Outside the public sector, most would not have joined a final salary pension scheme, and some would have had low or even no pension scheme membership until they joined a workplace pension, thanks to the phasing in of AE.
The limits of automatic enrolment
New research undertaken by one of the UK’s major pension providers has discovered that the theory is very much a reality. It found a generation of people born between the early 1970s and late 1980s who were too young to benefit from DB schemes, but also too old to feel the full benefit of AE. Five million of the mid-lifers, currently aged 40–54, are not on track for an adequate retirement. Of that 9% of the UK adult population worst at risk are part-time workers, renters and those who have taken a career break.
Steps to consider before retirement
The research did offer some hope for a way out of the pension mid-life crisis: start putting more into retirement plans now, as there are at least 13 years before State pension age arrives.
