Millions of people could benefit from a more secure retirement as the Government on Monday 21 July 2025 revives the landmark Pensions Commission to examine why tomorrow’s pensioners are on track to be poorer than today’s and make recommendations for change.
The Commission of 2006 was a huge success, building a consensus for the roll-out of Automatic Enrolment into pension saving that means 88% of eligible employees are now saving, up from 55% in 2012.
However, new analysis shows that there is more to do with the incomes of retirees set to fall over the next few decades if nothing changes:
- Retirees in 2050 are on course for £800 or 8% less private pension income than those retiring today.
- 4-in-10 or nearly 15 million people are undersaving for retirement.
This partly reflects too many working age adults (45%) saving nothing at all into a pension, with lower earners, the self-employed and some ethnic minorities particularly at risk:
- Over 3 million self-employed are not saving into a pension.
- Only 1-in-4 low earners in the private sector are saving into a pension.
- Just 1-in-4 of those from a Pakistani or Bangladeshi background are saving.
New analysis today also reveals a stark a 48% gender pensions gap in private pension wealth between women and men. A typical woman currently approaching retirement can expect a private pension income worth over £5,000 less than that of a typical man (just over £100 per week for a woman compared to just over £200 a week for a man).
While the introduction of Automatic Enrolment increased the numbers saving, saving levels have often remained low. Around 1-in-2 workers in the private sector only save around the minimum contribution level (8% or less of earnings).
So the Government is today announcing it will revive the landmark Pension Commission two decades on, to address these stark findings.
The relaunched Commission will explore the complex barriers stopping people from saving enough for retirement, with its final report due in 2027. It will examine the pension system as a whole and look at what is required to build a future-proof pensions system that is strong, fair and sustainable.
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.
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.
Chancellor of the Exchequer Rachel Reeves said: 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 said: The original Pensions Commission helped get pension saving up and pensioner poverty down. But if we carry on as we are, tomorrow’s retirees risk being poorer than today’s. So we are reviving the Pensions Commission to finish the job and give today’s workers secure retirements to look forward to.
Rain Newton-Smith, Chief Executive of the Confederation of British Industry said:The only route to higher living standards both in work and in retirement is through higher growth, productivity and better savings. As we look to the next decade and beyond, finding a consensus across business, government and our society on how to support people to save by building on the Mansion House reforms can create a pathway to a better future.
Taking the time to review the best pathway to achieve this, whilst pursuing broader measures to support growth, will be needed to make it affordable for employers and workers and crucial to the aim of rising living standards, now and in retirement.
Paul Nowak, General Secretary of the Trades Union Congress said: Everyone deserves dignity and security in retirement, but right now many workers – especially those in the private sector – will find themselves without enough to get by on. Far too many people won’t have enough pension for a decent retirement, and too many – especially women, BME and disabled workers and the self employed – are shut out of the workplace pension system all together.
That’s why reviving the Pensions Commission – bringing together unions, employers and independent experts – is a vital step forward. Twenty years ago the Pension Commission played a key role in bringing millions more people into workplace pensions and reducing the risks of pensioner poverty. We now have a chance to build on that work by reaching a long-term consensus on extending auto-enrolment to those workers still missing out, and making sure that this system delivers the decent retirement incomes all workers need.
Rocio Concha, Director of Policy and Advocacy at Which? Said: Which? research has found that many consumers are concerned that they won’t have the money they need for a comfortable retirement, so it is encouraging to see the government take steps to reverse this trend.
For some consumers, the idea of contributing more money into their pension pot is both daunting and unmanageable, so it is crucial that this review looks in depth at the challenges savers face, and Which? looks forward to working with the government towards long-term reform of the industry.
The Pensions Commission will be made up of Baroness Jeannie Drake (a member of the original Commission), Sir Ian Cheshire and Professor Nick Pearce, who will be responsible for steering its work. Drawing on the success of the original Pension Commission in building a national consensus, they will work closely with stakeholders such as the Confederation of British Industry and the Trades Union Congress.
The Commission will make proposals for change beyond the current parliament to deliver a pensions framework that is strong, fair and sustainable. It will build on the Investment Review and Pension Schemes Bill – both of which ensures that people’s savings are working hard to support them in retirement.
Alongside the Commission, the Government has, as required by law, also launched the State Pension Age Review, commissioning two independent reports for Government to consider when deciding the State Pension age for future decades:
- Dr Suzy Morrissey will report on factors government should consider relating to State Pension age.
- The Government Actuary’s Department will prepare a report on the proportion of adult life in retirement.
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