Chatham House Report

Paola Subacchi, William Jackson, Vanessa Rossi, Richard Varghese


This report argues that middle class households in the UK face an acute risk of a considerable drop in their income on retirement.

  • The scale of the reductions in income and the potential for dashed expectations about individuals' quality of life in retirement raise the spectre of future political and fiscal pressures.
  • By focusing on the income that households are expected to generate in retirement on the basis of their cumulated wealth and entitlements, disaggregated by income group and age cohort, this report offers a distinct perspective on the pensions debate, reflecting recent trends and changes in the pension system.
  • Through this methodology, it aims to contribute to a better understanding of the impact of economic conditions, saving patterns and individual preferences on final retirement incomes.
  • The report suggests that there is a window of opportunity to support the middle-aged, middle-income groups either to adjust to lower retirement incomes or to save and avoid seriously diminished living standards in retirement.
  • The report recommends that the UK government should look at guaranteeing minimum annuity rates, providing matching schemes for pension contributions and improving access to financial advice.