The UK government has today revived the Pensions Commission to review the adequacy of pensions, however, with the Commission’s report not due until 2027, the pensions industry has called for urgency and action in order not to worsen the nation’s savings crisis.
After originally being expected by the end of 2024, the UK government has finally made a start on the Pensions Adequacy Review by reviving the Pensions Commission to examine why people are not saving enough and make recommendations for change.
And while the steps to address pensions adequacy were widely welcomed by the industry, the 2027 final report timeline was criticised by many as too slow.
Paul Leandro, partner at Barnett Waddingham, said: “A final report in 2027 means at least another two-year delay before solutions will be implemented – which pushes the time bomb closer to detonation.”
Phil Parkinson, head of retirement investment at Mercer, added that a shorter timeline would have been welcomed as the inter-generational savings gap needs to be addressed “now”.
He said: “We estimate the savings gap will be £25trn by 2050 and that cost will be borne by future generations. The longer we take to address this challenge, the larger the savings gap will be, and the more challenging it will be to, in turn, find ways to fund other public programmes such as the [National Health Service] NHS.”
Lou Davey, head of policy and external affairs at the Independent Governance Group (IGG), also expressed disappointment over the proposed timeline.
She said: “The review report is not due until 2027, which is disappointingly still a long way off. However, we are encouraged to see the Commission includes experts like Baroness Jeannie Drake, who have been deeply engaged in this issue over many years. We hope the resulting review is robust and its recommendations form a solid roadmap that all political parties are on board with.”
James Carter, head of platform policy at Fidelity International, added that delays will only “widen the pensions gap” and “undermine” outcomes for future retirees.
He added that balancing the need to raise contribution levels with what is affordable for employers and individuals “will not be easy – but it is necessary”.
This was echoed by Ian Cornelius, chief executive officer of NEST, who said: “The system must strike a balance between ensuring that working people have sufficient income in retirement and supporting their day-to-day financial resilience before retirement.”
“We urgently need innovation at the decumulation stage so that people can turn their pension pots into a reliable, sustainable income”
Matt Calvey, Isio
Matt Calvey, defined contribution (DC) specialist and director at Isio, pointed out that renewed focus is welcomed, but the challenge now is turning analysis into action.
He said that the 8% contribution level “won’t deliver” a decent standard of living in retirement.
“We need a more inclusive approach that recognises a wide range of circumstances, with reforms that are proportionate, flexible, and designed to support people across the income spectrum. That must include tackling structural inequalities like the gender pensions gap, which continues to penalise women for time out of the workforce or lower-paid, part-time roles,” he noted.
Calvey added that adequacy doesn’t stop at contributions.
“It’s also about what people get out of the system. We urgently need innovation at the decumulation stage so that people can turn their pension pots into a reliable, sustainable income. If we get both ends right, increasing what goes in and improving what comes out, we can make a lasting difference to retirement outcomes across the UK.”
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