Daniela Silcock: Stress testing profiles with higher exposure to structural barriers can help identify where systems exclude those most in need.
Current pensions are failing to deliver sufficient retirement incomes for many people in disadvantaged groups, latest research finds.
A research report by Daniela Silcock Pensions Research (DSPR) and Ignition House – supported by Standard Life Centre for the Future of Retirement, Pensions UK, Nest, the Centre for Ageing Better and Age UK – found a lack of stable employment, steady earnings and the capacity to engage with saving, has left some adrift of the saving levels required to deliver an adequate retirement income.
The report – Stacked disadvantage and retirement outcomes – said many people do not experience working life in a manner friendly to pension saving.
It said policy, regulation and industry practice need to respond to how people actually live and work.
The report said that, for the government, this means testing policy against disruption and ensuring eligibility and contribution rules work for people with variable earnings and who spend time out of work.
For industry, the report said this means making pension saving work for people with changing jobs, hours and income by handling fluctuating earnings and making it simple for people to stay in, rejoin and take action.
The research draws on 52 studies – including national surveys, government and administrative data, and interview and case study research. For each source, the team recorded evidence on life stages such as education, work, caring, health and later life, along with characteristics including ethnicity, gender, disability, socio-economic background and region, and outcomes such as pension saving, other savings, housing and retirement income.
The analysis looked at what happens when multiple characteristics and experiences overlap and reinforce each other, and how this affects and compounds outcomes.
It said that ethnicity, gender, disability and socio-economic background shape how people are treated by and within labour markets, institutions and government policy systems – with some groups more likely to experience low pay, insecure work, caring responsibilities and ill health.
The report added that people with multiple characteristics linked to higher risk are more vulnerable to poor outcomes – but noted the system was designed around stable, full-time employment with steady earnings and time to engage.
It said: "When lives do not follow this pattern, gaps can open early and repeat. By the time people reach later life, these gaps can be reflected in smaller pensions, leading to weaker resilience and greater reliance on means-tested support."
The research found these outcomes were not inevitable but noted that, without change, more people will reach retirement with limited resources because the system does not reflect how many people live and work.
It said extending pension coverage to low earners and insecure workers, protecting saving during periods of caring and ill health, and making systems easier to use can all improve outcomes, as could embedding stress testing in policy design.
DSPR director Daniela Silcock said: "Stress testing profiles with higher exposure to structural barriers can help identify where systems exclude those most in need.
"Embedding this approach in policy design would help ensure the system works for a wider range of lives, not just those with stable work patterns."
Pensions UK deputy director for strategic policy and research Matthew Blakstad added: "If pension policy and systems are designed solely around uninterrupted, full‑time employment, too many people will continue to fall through the gaps.
"This study shows why it's important the Pensions Commission takes into account a pensions framework that reflects the diversity and reality of modern working lives and better protects people when their earnings are disrupted, so that time spent out of the workforce or in insecure work does not translate into permanently poorer retirement outcomes."
