Guest comment: Household reliance on DB savings

Those currently approaching retirement will have less DB pension rights than those who came before.

It is not yet insignificant, with over 80 per cent of workplace pension assets in DB schemes.

But are these DB assets the preserve of the privileged few (as popular perception often suggests) or are they supporting a far broader part of the spectrum?

Let’s focus on how many households approaching retirement may meet income targets and conduct a small (theoretical) experiment: what happens when we take the DB away?

Around 30 per cent of households approaching retirement are not on track to achieve a minimum income standard in retirement.

This rises to 40 per cent if DB pension rights are removed. Ten per cent of households are dependent upon their DB rights to meet a minimum income standard.

Only 3 per cent have an equivalent dependency upon DC pension saving.

Considering a more desirable level of retirement income, the PLSA’s moderate income standard: Over a third of households (37 per cent) are on course to meet this target, but this drops to 15 per cent without the support of their DB savings.

Most households who are on course are only able to do so because of their DB savings.

DB pension schemes continue to provide an important underpin to many households approaching retirement and are not just important to the wealthiest retirees.

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