In contrast to some of the pessimism about the retirement prospects of younger members of the UK workforce, a new analysis from the Resolution Foundation has found that young adults will have retirement incomes that are similar to today's pensioners.
The analysis is in contrast to the popular view that the pensioners of today are a 'golden generation' who have benefited from generous pensions. Whilst the report agreed that pensioner incomes have risen significantly over the last century to match or sometimes even surpass working people, it found that these levels can be broadly maintained in the future.
The chief driver behind this recovery in pension income the Resolution Foundation says is auto enrolment. Automatic enrolment was introduced in the UK in 2015 and sees all eligible employees of an organisation automatically enrolled in a workplace pension scheme. Figures published by The Pension Regulator in July 2017 revealed that more than eight million employees have signed up for a workplace pension since the scheme began, with many of these having never saved for their retirement before.
Whilst younger workers are less likely to build up the housing wealth that many baby boomers have acquired and hey will not be entitled to a state pension until they are older than the current generation of pensioners, the future is much brighter for them than many experts predict says David Finch, senior economic analyst at the Resolution Foundation.
"Rising pensioner incomes has been one of the biggest living standards success stories this century. And yet retirement is second only to housing in terms of causes for concern for young people's prospects."
"But these fears are overdone. Millennials are on course to enjoy similar levels of retirement income to today's pensioners, largely thanks to the success of auto-enrolment in getting them to save into a workplace pension from an early age."