{"id":2701,"date":"2025-05-29T14:57:23","date_gmt":"2025-05-29T13:57:23","guid":{"rendered":"https:\/\/blogs.bath.ac.uk\/iprblog\/?p=2701"},"modified":"2025-05-29T14:57:53","modified_gmt":"2025-05-29T13:57:53","slug":"downhill-all-the-way","status":"publish","type":"post","link":"https:\/\/blogs.bath.ac.uk\/iprblog\/2025\/05\/29\/downhill-all-the-way\/","title":{"rendered":"Downhill all the way?"},"content":{"rendered":"

A major research collaboration between pension consultants LCP and the University of Bath<\/a> has provided new insights into how pensioners choose to spend their money in retirement, revealing major differences across the pensioner population.<\/em><\/p>\n

Steve Webb<\/a> is a Visiting Fellow at the Institute for Policy Research (IPR) in addition to his role at Partner at Lane Clark & Peacock. Steve is a public policy expert with considerable political experience, including roles as Pensions Minister (2010 \u2013 2015) and MP (1997 \u2013 2015). Prior to his political career, he was an academic at the University of Bath. Dr Ricky Kanabar<\/a> is a senior lecturer in the Department of Social & Policy Sciences<\/a> and Research Associate at the Resolution Foundation, and his principal research interests are in the Social Mobility, Ageing and Health. Dr Aida Garcia Lazaro<\/a> is an economist and researcher at the Institute for Policy Research & Economics Department.\u00a0<\/em><\/p>\n

Read the report \u2018Downhill all the way\u2019 here.<\/a><\/p>\n

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In the future, millions of people who work in the private sector will retire with a state pension and one or more Defined Contribution pension pots<\/a>. As things stand, savers are largely left to their own devices as to how they draw on their pension pot through retirement. However, legislation shortly to be presented to Parliament will place a legal duty on pension providers to offer a \u2018default\u2019 post-retirement journey. In essence, this will shape how retirees draw money out of their pension if they make no active choices.<\/p>\n

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The big problem for providers is that there is limited evidence regarding the trajectory of pensioner spending in retirement. For example, should the money be front-loaded to support a more active early phase of retirement, or end-loaded to protect against rising prices and the risk of later life care costs?<\/p>\n

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To inform these decisions, our new report - \u2018Downhill all the way\u2019?<\/a>\u2019 \u2013 \u00a0has analysed data on the spending patterns of over 100,000 pensioners collected over more than half a century as part of annual government surveys of households.<\/p>\n

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The starting point for designing post-retirement products should be \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 analysis of what pensioners actually spend. This data provides startling evidence of the diversity of pensioner preferences and in particular that homeowners strongly prefer to spend more of their retirement wealth in the earlier part of their retirement, whereas renters may want and need a steadier income. The more that providers can find out about their savers, the more the post-retirement journey can be tailored to be a good fit for different groups of pensioners.<\/p>\n

Steve Webb, Partner at LCP<\/p>\n<\/blockquote>\n

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Key findings are:<\/p>\n