The Institute for Fiscal Studies (IFS) has made four recommendations for improving pensions adequacy that it believes would improve the state pension and boost private pension savings by around £11bn a year.

The recommendations are the result of a two-and-a-half-year research project exploring how to improve retirement outcomes, and come as the government has promised to begin its own pension adequacy review in the coming months.

The report calls for changes that take into account the needs of low earners who may be adversely affected by increases in contribution rates. It also argues for measures to make it easier for self-employed people to save for a pension.

“Without decisive action, too many of today’s working-age population face lower living standards and greater financial insecurity through their retirement.”

Paul Johnson, IFS

Paul Johnson, director at the IFS and co-director of the Pensions Review, warned that there was “a risk that policymakers have become complacent when it comes to pensions”, following the success of policies such as auto-enrolment.

“Without decisive action, too many of today’s working-age population face lower living standards and greater financial insecurity through their retirement,” Johnson said.

“Our recommendations give the government a clear and affordable roadmap: shore up the state pension, help workers save more – but only in periods when they are better placed to do so – and help individuals to make the most of their pension pots through retirement. Taken together, they would create a pension system fit for the next generation.”

A four-point ‘guarantee’ for the state pension scheme

The four recommendations relate to the state pension, boosting private savings, means-tested support for low-income retirees, and improved management of pensions through retirement.

On the state pension, the IFS has proposed a “four-point guarantee” to “increase confidence in the state pension as a stable and secure basis of the pension system”.