The government should support lower earners to boost pension savings throughout working life and steer more people to taking their private pensions at or near the state pension age, a report from the Fabian Society has suggested.

The report, When I'm 64, found that while people usually associate the years before state pension age with affluence, not poverty, the UK is facing a "hidden poverty crisis" among 60 to 65-year-olds.

Indeed, the research found that poverty is high in the years up to 66, as the binary divide between working age and pension age does not reflect the lives of people in their 60s.

It also clarified that while public policy often assumes that most people will work up to state pension age, this is far from the reality, as 52 per cent of 60-65-year-olds were working in 2023.

And whilst there was some improvement in employment amongst this age group since 2010, during the pandemic, the employment rate for this age group fell again and it has not recovered to its pre-Covid peak.

The Fabian Society also emphasised that current retirement savings do not make up the gap facing savers in retirement, as 470,000 people between 60 and 65 who are in poverty (40 per cent) are in a household with a private pension in payment.

And whilst optimists hope that the current spike in poverty between 60 and state pension age is a temporary effect, caused by the recent and rapid rise in the state pension age, the report found that there are strong reasons for thinking things will not turn out this way without government action.

Given this, the Fabian Society argued that a comprehensive package of actions is needed to improve experiences of work, and help low and middle earners with their pensions.

In particular, the report recommended that the government boost pension savings for low earners by extending auto-enrolment to more workers, and move towards employer contributions worth at least 12 per cent of total earnings for low and middle earners.

It also stressed the need to develop solutions for automatic pension saving by the self-employed, and to negotiate higher sector-level minimum employer contribution standards in low-paying industries such as adult social care.

The report also suggested the government should look to test options for automatically increasing pension contributions at key moments, such as when incomes increase or at landmark birthdays, alongside options to ‘opt down’ rather than just opt out.

Alongside this, it said that the government could improve pensions advice and defaults for low and middle earners after 50 by revising communications to focus on working longer, saving more and accessing pensions at state pension age.

It also called for greater consideration on the idea of automatically consolidating defined contribution pension pots as people approach retirement, or requiring most people to take guidance or advice before accessing a pension more than three years before state pension age.

The recommendations were not isolated to pensions, as the report also emphasised the need to improve everybody’s experiences at work by enhancing working conditions for people of all ages to reduce the number of people leaving early and make returning more viable.

In addition to this, it emphasised the need to provide targeted employment and skills support to help people re-skill and change jobs throughout their working lives, ensuring that over-55s receive early and tailored support.

It also suggested that the government could improve benefit access and levels by promoting working-age benefit take-up, creating better tailored work-related conditions, and increasing payments for people with long-term barriers to work as they approach state pension age.

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