Savers have been facing a more challenging investment market in a period where they have had to take more individual responsibility of their savings, Financial Conduct Authority (FCA) chief executive, Andrew Bailey, has warned.

Delivering a speech on intergenerational differences yesterday (2 July), Bailey said that pension freedoms has come at a time where real and nominal interest rates have been near zero and negative for real rates, which has “increased the real cost of saving in retirement”.

Bailey added that the new generation are not beneficiaries of the “old model” who entered the mortgage market early and paying it off before reaching a compulsory retirement date.

“Over time we have transferred responsibility for saving for retirement from employers and the State much more to individuals, first in the accumulation phase and more recently in the decumulation phase. To be clear, this makes sense in view of increased longevity and the need for people to manage their retirement more flexibly, but it does raise important issues,” Bailey said.

He also noted the decline of the more traditional saving model with a guaranteed return, which have been replaced by “asset manager-based savings”, where the individual is exposed to the change in their investments.

In May, the FCA published its Intergenerational Discussion Paper in which it set out changing financial needs over the last decade.

In April, a House of Lords committee said the government should consider scrapping the triple lock in a report on intergenerational fairness, which it called “unsustainable”.

Commenting, Aegon head of pensions, Kate Smith, said: “It’s important we recognise the changing financial dynamics of different generations and in particular the impact that buying property later in life has on younger generations’ ability to save for the long term and also the transfer of investment risk to younger generations following the decline of DB pensions.

“Government and industry need to address a number of key areas in particular. Firstly, individuals are largely responsible for saving for their retirement themselves and need support with investment decisions and over how much to save.

“The lack of affordable housing means more and more people are getting onto the property ladder in later life and potentially face paying a mortgage for longer. This has a knock-on effect on their ability to save and build a secure retirement.”

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