UK government revives Pensions Commission to address saving inadequacy

The UK government has revived the Pensions Commission to examine why people are not saving enough and make recommendations for change.

The 2006 Commission was considered a success, building a consensus for the roll-out of automatic enrolment into pension saving, which means 88% of eligible employees are now saving, up from 55% in 2012.

However, the government found that if nothing changes, retirees in 2050 are on course for £800 or 8% less private pension income than those retiring today, and 4-in-10 or nearly 15 million people are undersaving for retirement.

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

The government also found a 48% gender pensions gap in private pension wealth between women and men, where a typical woman approaching retirement can expect income worth over £5,000 less than that of a typical man.

To address these findings, the government has revived the Pensions Commission. It will explore the complex barriers stopping people from saving enough for retirement, with its final report due in 2027. It will examine the UK pensions system as a whole and look at what is required to build a “future-proof pensions system that is strong, fair and sustainable”.

The Commission will be made up of Jeannie Drake (a member of the original commission), Ian Cheshire and professor Nick Pearce, who will be responsible for steering its work.

Drawing on the success of the original Pensions Commission in building a national consensus, the trio will work closely with stakeholders such as the Confederation of British Industry and the Trades Union Congress.

The government said the Commission will make proposals for change beyond the current Parliament to deliver a pensions framework that is “strong, fair and sustainable”. It will also build on the Pensions Investment Review and Pension Schemes Bill.

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.”

She added that the original Pensions Commission laid the groundwork, and now, two decades later, it is revived to tackle the barriers that stop too many from saving in the first place.

Chancellor of the exchequer Rachel Reeves added: “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 warned that if people in the UK “carry on as we are”, tomorrow’s retirees risk being “poorer” than today’s.

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

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