Developing retirement living standards
What do people need for a range of different living standards in retirement? Is it possible for the public to reach consensus about retirement living standards above a minimum level, as described through the Minimum Income Standard (MIS)? Can we use the same approach as that used in MIS to develop such retirement living standards?
These questions are central to this project, funded by the Pensions and Lifetime Savings Association (PLSA), which aims to establish three distinct retirement living standards, to be used by the PLSA, individuals and other organisations in thinking about and planning for retirement.
CRSP’s existing work on what is needed for a minimum socially acceptable standard of living establishes a threshold below which the public agree no one should fall, marking the level below which it is difficult to meet essential minimum needs and participate fully in society. At the same time the minimum income level described through MIS has also come to be seen as a standard against which the adequacy of, for example, pensions can be assessed. As such, the MIS threshold for single and partnered pensioners can be seen as representing a minimum ‘target’ that all should be able to reach in retirement.
While ongoing MIS research is valuable in establishing this minimum retirement ‘target’, engaging the public in discussions about retirement living standards above a minimum is an important and valuable task. The MIS threshold describes minimum needs, but on reaching retirement, individuals and couples may hope for a living standard above this minimum level, shaped both by their living standards while in work and their expectations of retirement. Establishing retirement ‘targets’ above the minimum, describing living standards above this level and the income needed to provide these, will allow for more sophisticated pension planning, underpinning a more nuanced public conversation about expectations and needs in retirement.
This project will establish public consensus regarding two additional levels of living standards in retirement, above the minimum described through MIS. Consequently it will be possible to outline three distinct retirement living levels, which can be used both as publicly-determined descriptions of what it means to live at different standards in retirement and as the basis of income ‘targets’ – expressed in pounds and pence – at these three levels. The research uses as its starting point the minimum budgets defined through CRSP’s influential research on Minimum Income Standards, and adopts a similar methodology, asking groups of members of the public to reach consensus about what retired singles and couples in the UK need in order to have two living standards above a minimum.
The first stage of the project involves groups of members of the public – both already retired and post-50 – discussing how these two living standard levels above a minimum can and should be described. Following on from this, a series of groups of members of the public (retired and post-50), in locations across the UK, will work together to develop ‘baskets’ of goods and services needed for these living standards. As with MIS, the aim is to build consensus about what is needed in order to live at these two different levels above a minimum. A final stage in the project will ask groups in London to consider these ‘baskets’ of goods and services, whether these would provide the described living standard in the capital, and if not what needs to be different.
Padley, M. and Shepherd, C. (2021) Retirement Living Standards in the UK in 2021. London: The Pensions and Lifetime Savings Association.
Padley, M. and Shepherd, C. (2021) The Impact of Covid-19 on thinking about and planning for retirement. London: The Pensions and Lifetime Savings Association.