A federal government restarts the Pension Commission, an effort aimed at addressing a national retirement savings shortage.
The UK Pensions Commission, relaunched to tackle the retirement savings crisis, is set to publish its final report in 2027. The Commission, comprising of esteemed individuals such as Sir Ian Cheshire, former group chief executive of Kingfisher, and Professor Nick Pearce, previous director of Institute for Public Policy Research, will focus on long-term structural reforms to ensure future pensioners do not become poorer than current ones.
One of the key areas of concern is the significant gender pension gap. Women, on average, can expect a private pension income worth over £5,000 less than that of a typical man. The Commission aims to confront this issue by reviewing automatic enrolment thresholds, improving pension sharing on divorce, and enhancing childcare support to enable women to remain in the workforce.
Another focus area is improving pension saving among the self-employed, who are less likely to contribute to pensions compared to employees. The Commission may consider innovations such as using the annual tax return system to default self-employed individuals into pension saving, with opt-out options. Another possibility is to allow limited emergency access to pension pots to encourage contributions, while balancing the need to preserve long-term saving discipline.
The Commission will also explore why nearly half of working-age adults save nothing for retirement, with particular attention to low earners and ethnic minorities who are less likely to save into pensions. The think tank recommends expanding the auto-enrolment age range from 22 to state pension age to 16 to 74.
The Chancellor has stated that it's time to ensure that people can look forward to a comfortable retirement. The Commission's work will aim to make the pension system fairer, more inclusive, and adaptable. Key potential recommendations include building on the original 2000s Pensions Commission achievements such as automatic enrolment, adjusting and expanding this framework to meet today’s and tomorrow’s challenges.
Steve Webb, a former pensions minister, has praised the government's choice of commissioners, while the Institute for Fiscal Studies has suggested that higher earners should contribute more to their pensions and that the scope of auto-enrolment should be widened.
The Commission will not consider the state pension triple lock, state pension age, or pension tax relief. However, it will examine the whole pension system and look at how to deliver a future framework that is "strong, fair, and sustainable".
The government has warned that retirees in 2050 are on course for £800 or 8% less private pension income per year than those retiring today. With over three million self-employed people not saving into a pension and one in four low earners in the private sector are saving nothing for retirement, the Commission's recommendations are eagerly awaited.
Lower earners, the self-employed, and some ethnic minorities are particularly at risk of not saving into a pension. For instance, just one in four of those from a Pakistani or Bangladeshi background are saving into a pension. Baroness Jeannie Drake, a member of the original commission, will be part of the new commission.
The Commission's final report, due in 2027, will provide a comprehensive blueprint for addressing the retirement savings crisis and ensuring a comfortable retirement for all. The government has launched a State Pension Age Review on July 21, 2025, indicating a broader focus on pension-related issues in the coming years.
- The Commission plans to address the gender pension gap by reviewing automatic enrolment thresholds, improving pension sharing on divorce, and enhancing childcare support to enable women to remain in the workforce.
- To improve pension saving among the self-employed, the Commission may consider using the annual tax return system to default self-employed individuals into pension saving, with opt-out options.
- The Commission will explore why nearly half of working-age adults save nothing for retirement, particularly focusing on low earners and certain ethnic minorities who are less likely to save into pensions, and aims to propose a comprehensive blueprint for addressing the retirement savings crisis by 2027.
