Collective action from the pensions industry, employers and the government has been urged to help ‘generation X’ ensure that they have an adequate income in retirement.

In a Pensions Policy Institute (PPI) report, Generation VeXed: solving the retirement puzzle, the organisation warned that generation X, or people born between 1966 and 1980, are likely to have difficulty in achieving an “adequate, flexible and sustainable” retirement income.

The organisation, who worked on the report with Phoenix Group, stated that the decline of DB schemes, a challenging economic climate and the increase in casual working has meant that generation X is likely to reach retirement with a less stable income than older generations.

It added that generation X often have higher expenditure needs, due to a decrease in house buying, greater likelihood to be in debt, and a greater likelihood to need to provide or receive care.

Furthermore, generation X have not fully benefitted from the introduction of auto-enrolment and have limited time to bridge the savings gap before retirement.

The PPI warned that interventions from policymakers, industry and employers are becoming “increasingly important” to ensure that age cohort will have a good quality of like in retirement.

Commenting on the report, PPI head of policy research, Daniela Silcock, said: “While Generation X, will be reaching state pension age over the next 12 to 28 years, there is still scope for government, industry and employers to take collective action to help mitigate risks.

“The government could consider whether benefits could be restructured to ensure that those renting in retirement don’t lose out on means-tested benefits, such as housing benefit, reducing both the incentive to save and disposable income in retirement.

“Industry could help mitigate the risk of reaching retirement with less income that increases with an inflationary index and pays out until death. Products which combine sustainability and flexibility (which appeals to consumers) such as a drawdown and annuity hybrid product, could reduce the sustainable retirement income gap.

“Employers could support those who need to provide care, or develop health problems, to continue working and contributing to their pensions by allowing flexible working, encouraging shared parental leave, and providing retraining opportunities for workers who need a more sedentary position as they age.”

The report added that collective action now may also benefit future generations in their retirement.

Phoenix Group chief executive officer, Clive Bannister, added: “We need to recognise that some of gen X will not feel in a position to take action and that there is no silver bullet for solving their retirement challenge.

"However, with the right support, encouragement, and engagement, we can all help to ensure they don’t just sleepwalk into a grey and grim retirement when there is more that could be done."

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