The Pensions Commission has issued a stark warning that an estimated 15 million people in the UK are currently under-saving for their retirement, a figure projected to rise to 19 million without decisive action. The commission's interim report highlights that significant groups, including women, low and middle-income earners, and the self-employed, face a "severe cliff-edge" of financial insecurity in later life.
Urgent Call for National Settlement on Pensions
An urgent call has been made for a fresh "national settlement" on pensions to address the growing crisis, driven by factors such as longer retirements, slower economic growth, and declining home ownership. The report notes that while automatic enrolment has brought millions into workplace pensions, many are still not saving enough, and groups like the self-employed (with only 4 per cent saving) are often excluded from such schemes.
Groups Most Affected
- Women: Often face lower lifetime earnings and career breaks, leading to smaller pension pots.
- Low and middle-income earners: Struggle to set aside sufficient funds due to rising living costs.
- Self-employed: Only 4 per cent are saving into a pension, lacking employer contributions.
The commission aims to deliver a final report with recommendations in early 2027, seeking to secure adequate income in later life and create a pension system fit for future decades. Concerns have been raised about the current level of automatic enrolment contributions, which many experts argue are too low to provide a comfortable retirement.
What Needs to Change?
The Pensions Commission is exploring options such as increasing minimum contribution rates, expanding automatic enrolment to include the self-employed, and addressing the gender pension gap. The goal is to prevent millions from facing a retirement cliff-edge and ensure financial security for older generations.
