Day: July 22, 2025

Millions of people could benefit from a more secure retirement as the UK Government revives the landmark Pensions Commission to examine why tomorrow’s pensioners are on track to be poorer than today’s and make recommendations for change.

• Without action tomorrow’s retirees are on track to be poorer than today’s.
• Almost half of working-age adults are still saving nothing with low earners, some ethnic minorities and the self-employed least likely to be pension saving.
• Revived Pension Commission will consider the long-term future of our pensions system to make today’s workers better off in retirement.

Millions of people could benefit from a more secure retirement as the Government revives the Pensions Commission to examine why tomorrow’s pensioners are on track to be poorer than today’s and make recommendations for change.

The Commission of 2006 was a huge success, building a consensus for the roll-out of Automatic Enrolment into pension saving that means 88% of eligible employees are now saving, up from 55% in 2012.

However, new analysis shows that there is more to do with the incomes of retirees set to fall over the next few decades if nothing changes:

• Retirees in 2050 are on course for £800 or 8% less private pension income than those retiring today.
• 4-in-10 or nearly 15 million people are undersaving for retirement.

This partly reflects too many working age adults (45%) saving nothing at all into a pension, with lower earners, the self-employed and some ethnic minorities particularly at risk:

• Over 3 million self-employed are not saving into a pension.
• Only 1-in-4 low earners in the private sector are saving into a pension.
• Just 1-in-4 of those from a Pakistani or Bangladeshi background are saving.

New analysis also reveals a stark a 48% gender pensions gap in private pension wealth between women and men. A typical woman currently approaching retirement can expect a private pension income worth over £5,000 less than that of a typical man (just over £100 per week for a woman compared to just over £200 a week for a man).

While the introduction of Automatic Enrolment increased the numbers saving, saving levels have often remained low. Around 1-in-2 workers in the private sector only save around the minimum contribution level (8% or less of earnings).

So the Government has announced it will revive the landmark Pension Commission two decades on, to address these stark findings.

The relaunched Commission will explore the complex barriers stopping people from saving enough for retirement, with its final report due in 2027. It will examine the pension system as a whole and look at what is required to build a future-proof pensions system that is strong, fair and sustainable.

Work and Pensions Secretary Liz Kendall said: “People deserve to know that they will have a decent income in retirement – with all the security, dignity and freedom that brings. But the truth is, that is not the reality facing many people, especially if you’re low paid, or self-employed.

“The Pensions Commission laid the groundwork, and now, two decades later, we are reviving it to tackle the barriers that stop too many saving in the first place.”

Chancellor of the Exchequer Rachel Reeves said: “We’re making pensions work for Britain.

“The Pension Schemes Bill and the creation of pension megafunds mean an average earner could get a £29,000 boost to their pension pots. Now we are going further to ensure that people can look forward to a comfortable retirement.”

Minister for Pensions Torsten Bell said: “The original Pensions Commission helped get pension saving up and pensioner poverty down. But if we carry on as we are, tomorrow’s retirees risk being poorer than today’s.

“So we are reviving the Pensions Commission to finish the job and give today’s workers secure retirements to look forward to.”

Rain Newton-Smith, Chief Executive of the Confederation of British Industry said: “The only route to higher living standards both in work and in retirement is through higher growth, productivity and better savings.

“As we look to the next decade and beyond, finding a consensus across business, government and our society on how to support people to save by building on the Mansion House reforms can create a pathway to a better future.

“Taking the time to review the best pathway to achieve this, whilst pursuing broader measures to support growth, will be needed to make it affordable for employers and workers and crucial to the aim of rising living standards, now and in retirement.”

Paul Nowak, General Secretary of the Trades Union Congress said: “Everyone deserves dignity and security in retirement, but right now many workers – especially those in the private sector – will find themselves without enough to get by on.

“Far too many people won’t have enough pension for a decent retirement, and too many – especially women, BME and disabled workers and the self employed – are shut out of the workplace pension system all together.

“That’s why reviving the Pensions Commission – bringing together unions, employers and independent experts – is a vital step forward. Twenty years ago the Pension Commission played a key role in bringing millions more people into workplace pensions and reducing the risks of pensioner poverty.

“We now have a chance to build on that work by reaching a long-term consensus on extending auto-enrolment to those workers still missing out, and making sure that this system delivers the decent retirement incomes all workers need.”

Rocio Concha, Director of Policy and Advocacy at Which? said: “Which? research has found that many consumers are concerned that they won’t have the money they need for a comfortable retirement, so it is encouraging to see the government take steps to reverse this trend.

“For some consumers, the idea of contributing more money into their pension pot is both daunting and unmanageable, so it is crucial that this review looks in depth at the challenges savers face, and Which? looks forward to working with the government towards long-term reform of the industry.”

The Pensions Commission will be made up of Baroness Jeannie Drake (a member of the original Commission), Sir Ian Cheshire and Professor Nick Pearce, who will be responsible for steering its work. Drawing on the success of the original Pension Commission in building a national consensus, they will work closely with stakeholders such as the Confederation of British Industry and the Trades Union Congress.

The Commission will make proposals for change beyond the current parliament to deliver a pensions framework that is strong, fair and sustainable. It will build on the Investment Review and Pension Schemes Bill – both of which ensures that people’s savings are working hard to support them in retirement.

Alongside the Commission, the Government has, as required by law, also launched the State Pension Age Review, commissioning two independent reports for Government to consider when deciding the State Pension age for future decades:

• Dr Suzy Morrissey will report on factors government should consider relating to State Pension age.
• The Government Actuary’s Department will prepare a report on the proportion of adult life in retirement.

Caroline Abrahams, Charity Director of Age UK said: “We warmly welcome the Pensions Review, which has the potential to lay the foundations for a system of retirement saving that’s fit for the future.

“If we’re to avoid future generations of pensioners experiencing financial hardship, we need reforms that enable more people to build a decent standard of living, and we need them sooner rather than later to maximise the numbers who can be helped.

“Income for pensioners in the UK is based around both State and private pensions working together to help people enjoy a decent lifestyle once retired. The current system of saving has some significant gaps which have left many current pensioners struggling to make ends meet.

“Hopefully this can be avoided in future and particularly disadvantaged groups, including low-paid women and self-employed people on low incomes, can be helped to put money aside when appropriate for them to do so.

“There’s no getting away from the fact that the State Pension provides the bulk of retirement income for most pensioners, with 1.1million (13%) receiving all their income from the State.

“It’s therefore hugely important to consider the future of the State Pension alongside the role of private savings, as only once this is clear will it be possible to say with any accuracy how much people need to put aside to attain a decent standard of living once they retire.

“We look forward to working with the Government and the reviewers in the months to come.”

Jonny Haseldine, Head of Corporate Governance and Business Environment Policy at the British Chambers of Commerce said: Too few people are saving enough for retirement, affecting millions of employees and the firms we represent. Businesses want to help their staff make the right decisions for their financial futures.

“We welcome the launch of the new Pensions Commission – which is a timely and necessary next step from the original Commission over two decades ago.

“It is essential we have a pensions system that supports both employees to build up savings and employers in managing costs. That’s even more crucial in the current economic climate.

“We also welcome the reiterated commitment that employer contribution rates won’t be increased during this parliament. Any future rises in minimum contributions must be gradual and paused if economic conditions worsen, giving business time to adjust to increased costs.”

Jon Richards, General Secretary of UNISON said: “Every worker needs a pension they can rely upon in their old age. No one should be plunged into poverty when they retire.

“Any initiative that enhances current provision would be a good thing, especially moves to improve equality between men and women.

“With more pensioners falling into poverty as time goes by, it’s vital the commission works quickly.”

António Simões, CEO of Legal and General said: “Saving enough for retirement isn’t just important, it’s urgent to securing individual futures and building a more prosperous society.

“To do this we must tackle adequacy – we need people to be able to contribute the right amount from the first pound they earn, and to build a pot that is invested in assets that will generate returns to support them in later life.

“That’s why the launch of the new Pensions Commission matters. Whether that is gradually increasing minimum auto-enrolment contribution rates or making it easier to access private market investments, like L&G has delivered through its Private Markets Access Fund, it is time to break down the barriers to building a retirement pot that are faced by millions across the country.”

Miles Celic OBE, Chief Executive Officer of The CityUK said: “The Pensions Adequacy Review is another positive step in reforming pensions investment.

“Auto-enrolment has been a policy success, bringing millions into retirement saving, but further action is needed to ensure pension savings are adequate to provide an appropriate level of income for our ageing population.

“Total contributions will have to rise if we are to emulate the successes of, for example, Australia and Canada. This will involve difficult political choices alongside technical changes to policy and regulation, so it is right the appointees to the Commission consider the options thoroughly and, crucially, that they also draw on the industry’s significant expertise.”

Steve Webb, Partner at LCP said: “The first Pensions Commission changed the UK pensions landscape and started the process of reform by getting millions of employees saving for the first time.

“But much work remains to be done, and this new Commission will have to consider reforms against a much more challenging backdrop.

“The Government has selected people who are widely respected in the world of business, the trade union movement and academia, who will be well placed to undertake this vital work, and I look forward to working with them constructively as they map out a new agenda for retirement saving.”

David Raw, Managing Director for Markets at UK Finance said: “We welcome efforts to help ensure people are saving enough to deliver a decent level of income in retirement.

“Boosting financial and pension literacy, continuing to encourage private pension holding, and building on the success of auto-enrolment are key to achieving this.

“Well-functioning capital markets play a key role in a successful pension system and UK Finance looks forward to continuing to work closely with government as it progresses its programme for capital markets and pension reform.”

Chira Barua, CEO of Scottish Widows and CEO of Insurance, Pensions & Investments, Lloyds Banking Group said: “We’ve been mapping trends in the UK’s retirement saving for 20 years and while automatic enrolment has been a gamechanger in kickstarting pensions saving for millions of workers, 39% (around 15 million) still risk facing poverty in retirement and action needs to be taken while there’s still time.

“Bringing all the right groups and the pensions industry together in this way made real progress last time, and we look forward to supporting the Commission in getting closer to cracking the pension crisis.”