The Pensions Commission has today (19 May) published its interim report on the state of retirement saving in the UK, setting out the key challenges facing the current system and where it will focus its work next.
- Interim report highlights key challenges in retirement saving across the UK with 15 million people currently undersaving for retirement.
- Findings sets direction for further work to improve retirement outcomes ahead of final recommendations in 2027.
- Commission set up as part of government’s wider reforms to pensions system to help more people retire with dignity.
The Pensions Commission has today (19 May) published its interim report on the state of retirement saving in the UK, setting out the key challenges facing the current system and where it will focus its work next.
The report highlights that many people are not saving enough for retirement, particularly among low and middle earners, the self‑employed and women, and points to the need for the system to evolve to meet modern working lives.
There are currently 15 million people under saving for retirement which could reach 19 million without action, leaving large groups across the UK facing a severe cliff-edge when they retire, according to a new report from the Pensions Commission.
Set up by the Government in July 2025, the Commission aims to address a savings challenge that has been building for decades, examining why tomorrow’s retirees’ risk being worse off than today’s and making recommendations to reverse this.
This follows the success of the 2002 to 2006 Commission which built a consensus for the roll-out of Automatic Enrolment into pension saving, resulting in 89% of eligible employees now saving into their pensions, up from 55% in 2012.
Its findings include:
- Low and middle earners are most at risk, with around half saving only at minimum Automatic Enrolment levels with little else to fall back on.
- 45% of working-age adults – around 18 million people – are not saving into a pension at all, despite nearly half of them being in work.
- Where employers are contributing about the statutory minimum this is largely benefiting higher earners.
- Just 4% – one in 25 – of wholly self-employed workers are saving for retirement, and it’s even lower among younger self-employed people.
- On current trends around 3 in 10 private pension pots are accessed at the earliest possible opportunity with half of all pots taken out in full. Nearly half of these are spent on large expenses like a car, holiday or renovations.
The Commission examined why tomorrow’s retirees are on track to be poorer than today’s with too many working age adults are saving nothing at all into a pension. A final report with recommendations will follow in early 2027.
Pensions Commissioner, Baroness Jeannie Drake said: “Over the past two decades since the Turner Commission there is no doubt pensions reform can be described as a success. Yet the second Pensions Commission is looking forward and seeing many people not saving enough and millions not saving at all.
“This demands a renewed national settlement on pensions.
“Achieving this will require clarity of purpose, but it also offers a moment of opportunity; to renew a social contract that commands confidence across the country.
“The recommendations we present in our final report will address the need to secure adequate income in later life and a pension system that is fit for decades to come.”
The Commission will set out the course to improving future outcomes whilst ensuring the system is fair and sustainable within and between generations.
Minister for Pensions, Torsten Bell MP, said: “Britain has got back into the pension saving habit, but the job is only half done with tomorrow’s pensioners still on track to be poorer than today’s.
“The Pensions Commission sets out clearly the scale of the challenge: not enough people are saving for retirement, and many of those that are aren’t saving enough.”
The Commission warns that without action millions more people could be at risk of becoming reliant on state support in retirement.
It adds that there is much for public policy to do to shape the future of pensions, whilst maintaining the broad political consensus pensions has had since the Turner Commission in the 2000s. The Commission is clear that change must happen in the right way, with any recommendations for change implemented gradually.
The Government has ruled out any changes to Automatic Enrolment contributions this Parliament.
Dr Yvonne Braun, ABI Director of Long-Term Savings Policy said: “The report makes a powerful case for a new national settlement for pensions. Automatic enrolment is a sturdy foundation, but must evolve to meet the scale of the challenges ahead.
“We and our members stand ready to work with the Commission to deepen saving, extend coverage and support better decisions in retirement, so that everyone can look forward to greater financial security in later life.
“Over the next year the Commission will hear a wide range of views before presenting its final report and recommendations in early 2027. A call for views from all interested parties has also launched today.
Rocio Concha, Director of Policy and Advocacy at Which? said: “Which? welcomes this interim report from the Pensions Commission and the valuable evidence it brings together on the UK’s pension adequacy challenge.
“It is very encouraging to see recognition of the need to increase private pension saving rates and coverage, while also acknowledging the financial pressures caused by the cost of living crisis.
The report rightly highlights that too many working people are projected to reach later life without sufficient savings, and that women, carers, the self-employed and many ethnic minority groups continue to face structural barriers. It is also promising to see a strong focus on how to support people to use their pension savings throughout retirement.
“Which? looks forward to continuing to work with the Commission, industry and wider civil society groups to help drive the reforms needed so people are better prepared for retirement.”
Julian Mund, Chief Executive of Pensions UK, said: “Pensions UK welcomes the breadth and ambition of this report, and shares the Commission’s view that we need a new national settlement on pensions.
“Evidence presented in the report clearly strengthens the case for more pension saving over longer working lives, alongside systemic change that delivers sustainable incomes – building on welcome reforms in the Pension Schemes Act.
“We look forward to working with Government to explore how that diagnosis can be turned into a practical roadmap for reform, well before the next generation fall short of the retirement incomes they expect and deserve.”
Caroline Abrahams, Charity Director at Age UK: “We welcome this new report from the Pensions Commission, which provides an excellent analysis of the problems facing our pensions system today.
“This is the first and necessary step for ensuring the pensions system of the future enables tomorrow’s older people to have a decent standard of living.
“There’s a clear need to improve the way the State Pension and private pension systems work together; otherwise people on low incomes are at risk of falling through the cracks and hurtling towards their retirements without the required funds, or the time to make up the shortfall.
“We look forward to working with the Commission as it explores the best solutions for future pensioners.”
Aside from the commission, the government is also reforming the pension landscape and improving retirement for today’s workers. The Pension Schemes Act, passed this month, will benefit 22 million workers by up to £29,000 by the time they retire, driving down costs, boosting returns and enabling the automatic consolation of small pension pots to ensure every pound saved works harder for working people.
Louise Hellem, Chief Economist, CBI, said: “The publication of the Pensions Commission’s interim report is an important step towards building a long-term framework that delivers adequate living standards in retirement. Getting this right requires the government, businesses and individuals all to play their role in supporting better saving.
“As the debate progresses, it is vital that retirement adequacy is considered hand in hand with the UK’s growth ambitions. Strong economic growth underpins sustainable pension outcomes by supporting employment and higher sustainable wage growth, enabling individuals to save, and driving stronger investment returns over time.
“It is only growth that can sufficiently reduce difficult trade-offs and maintain political, public and business support for change.”
TUC General Secretary Paul Nowak said: “Workers deserve a pension system that guarantees against poverty in retirement and enables them to maintain their standard of living.
“Although millions more people are now building up workplace pensions, far too many on low and middle incomes are not heading for a decent retirement – with women, Black and minority ethnic and disabled workers, and those in the gig economy at highest risk.
“The Commission must now develop a bold plan to fix this, which will need to include higher employer contributions and a fair deal for those currently missing out.”
Nausicaa Delfas, Chief Executive of The Pensions Regulator, said: “The pensions system is still unfinished business with too many people on track for an inadequate retirement income.
“That is why we welcome the Pensions Commission report, and look forward to continuing to work with the Commission, Government and industry to create a system which delivers what matters most: a sustainable income in retirement for everyone.
Independent Age Chief Executive Joanna Elson, CBE reacts to the Pension Commission’s interim report: “We welcome the Pension Commission’s interim report, which clearly sets out the challenges future pensioners will face in securing an adequate income.
“It is positive that the Commission recognises the vital role of the State Pension and social security entitlements in supporting those on low incomes. The findings that certain groups, including women and disabled people, are at greater risk of under-saving are concerning, but not unexpected. They echo our own research, which shows that these groups are more likely to experience poverty in later life.
“With 1.7 million older people currently living in poverty and 1 million more hovering precariously on the edge, it is clear change is needed to ensure a future where everyone in later life has a dignified and financially secure older age.
“We look forward to continuing to work with the Commission as it develops its final recommendations.”
