The UK government has announced that it will revive the Pensions Commission to explore what retirement will look like for future pensioners and make recommendations for change.
It will look at the barriers that stop people from saving enough for retirement and examine the pension system to see what is required to build one that is future-proof, fair and sustainable. A final report on its findings is due in 2027.
The decision to relaunch it is based on new research, which highlighted that four in 10, or nearly 15 million people, are under-saving for retirement, and retirees in 2050 are on course for £800, or 8%, less private pension income than those retiring today. This partly reflects 45% of working age adults saving nothing at all into a pension.
In addition, only one in four low earners in the private sector are saving into a pension and one in two private sector workers only save around the minimum contribution level of 8% or less of earnings.
The research also found a 48% gender pensions gap in private pension wealth between women and men. A typical woman approaching retirement can expect a private pension income worth over £5,000 less than that of a typical man, at just over £100 per week for a woman compared to just over £200 a week for a man.
Liz Kendall, Work and Pensions Secretary, said: “People deserve to know that they will have a decent income in retirement, with all the security, dignity and freedom that brings. 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.”
Torsten Bell, Minister for Pensions, added: “The original Pensions Commission helped get pension saving up and pensioner poverty down. So, we are reviving it to finish the job and give today’s workers secure retirements to look forward to.”
Ruston Smith, chair of the Pensions Management Institute (PMI), said: “We welcome the launch of a second Pension Commission and the appointment of such a distinguished panel. This is a vital opportunity to tackle under saving and improve outcomes for those most at risk. With decades of inadequate savings ahead of us, we urge the Commission to take a holistic view of lifetime financial security and to set a clear timetable for reform to avoid further delay.”
Julian Mund, chief executive of Pensions UK, added: “Pensions UK supports the ambition this government is showing by setting up a second stage of the landmark Pensions Commission. Higher pension contributions must become the norm, with more people brought into saving, and a state pension that always protects against poverty.”
