The Department for Work and Pensions (DWP) estimated in 2012 that just over 10 million were at risk of having inadequate retirement incomes. Replacement rates are one measure of adequacy; assessing the extent to which retirement income allows individuals to replicate the standard of living they had in working life.

This Briefing Note considers the applicability and use of replacement rates in the context of the new pension flexibilities as well as other developments, such as the rise of debt levels. The note starts with an overview of how replacement rates are used. It then considers debt levels in the UK along with a brief overview of issues relating to the interaction of DC pensions and debt in other countries where a liberalised market is in place. The note considers particular challenges around the use of replacement rates in the context of the new pension freedoms. Finally, the note outlines some opportunities for and approaches to the management of retirement income, suggested by participants in roundtable conducted by the PPI and hosted by J.P. Morgan.

This Briefing Note was sponsored by J.P. Morgan. The PPI is grateful to J.P Morgan for their support in producing this note.  


To download Briefing Note 77, please click here.

To download a write up of the roundtable, please click here.