A retirement crisis will take hold within the next two decades without policy change to address widespread under-saving, according to Phoenix Insights.

Modelling from Phoenix Insights suggests as many as 17m UK adults are not on track to retire when they want to on the income they want.

The think tank said it expects the ‘under-saving crisis’ to come to a head in the next two decades, with people retiring in the 2030s and 2040s the least financial prepared for life after work.

Phoenix Insights called on the government to look into mechanisms to offer better support for decumulation decisions, including reforming the current advice and guidance regime, and clearly defining the requirement to offer decumulation defaults and expand to contract-based schemes.

It called on the government to further automatic enrolment, including the incremental increase of contributions and reconsidering the qualifying criteria.

The report also called on the government to protect lower earners by improving the flexibility of auto-enrolment, including requiring employers to continue their contribution during opt-out and exploring introducing sidecar products to allow employees to have emergency access to some contributions. 

It also called on the government to address unemployment for workers over the age of 50, including promoting inclusive employment practices such as flexible working and nurturing an age-friendly culture.

Catherine Foot, director of Phoenix Insights, said the government’s commitment to assess retirement adequacy is a critical opportunity to set out a plan to tackle under-saving and improve the retirement prospects of future generations.

She said: “As many as 17 million people are not saving enough to achieve the retirement they want, and the next two decades is when the effects of the savings crisis will really start to bite.

“Any changes will have a long-term impact so it’s important the review looks at the retirement landscape as a whole and how the different policies work together. This should include a review of the private and state pension systems to ensure people can achieve an adequate retirement income, and addressing how people engage with their saving and draw money from their pension.

“For people in their 50s and 60s, being in work can be the difference between having financial security or not later in life, so we believe the review should also look at how we can better support the over-50s to remain in work and continue to earn and save if they want to or need to.”

Phoenix Insights is the longevity think tank arm of retirement and insurance provider Phoenix Group.