"Strong and impactful" decisions are needed to avoid a future where retirement poverty is the norm, Hymans Robertson has said, after its analysis provided "stark evidence" of growing pension inadequacy.

Hymans Robertson's paper, Falling into a retirement adequacy crisis, showed how pension provision has evolved over the decades, emphasising that as defined benefit (DB) have closed and there’s more reliance on defined contribution (DC) schemes, a growing burden has been placed on individuals to manage risks previously managed by employers.

The report noted that, as DB schemes mature and a DB pension starts to become a legacy, there has also been a trend toward a world with more DC reliance and, as a result, lower expected outcomes, which are achieved with much greater volatility.

"The move away from DB to DC pensions has transformed the retirement landscape over the last few decades," Hymans Robertson actuarial consultant, Mark Stansfield, said.

"Where once there was predictability and security, there is now volatility and risk, with the burden of decision-making placed on individuals who may not have the tools or knowledge to navigate it."

This, the paper warned, will mean a gradual trend towards poorer outcomes in retirement and will have negative societal consequences.

Although Hymans Robertson admitted that ‘retirement adequacy’ as a term will mean different things for different people, it argued that "no matter how you look at it, the conclusion is largely the same: Retirement standards have trended downwards, and continue to do so".

While Hymans Robertson welcomed the revival of the Pension Commission as part of work to address adequacy concerns, it warned that "strong and impactful decisions are needed to avoid a future where retirement poverty is the norm".

Hymans Robertson head of corporate consulting, Leonard Bowman, added: “The shift has created a landscape where retirement outcomes are less certain, leading to real concerns for retirement outcomes and adequacy for many individuals.

"The issues, highlighted in our paper, run the real risk of de-railing UK companies’ strategies over the coming years as the next generation reaches retirement and these inadequacy issues become a reality.

"Combined with any future government policy proposals, companies could easily find themselves on the back foot.

“To avoid this, we are calling for a fundamental change in approach. Companies need the tools, insights and solutions to align their long-term workforce strategy with emerging retirement risks and be well placed to respond to evolving government pension policy. This will be the purpose of our Pensions Adequacy Project.”

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