A government-backed report has warned that 15 million people in the UK are not saving adequately for retirement, with the number potentially rising to 19 million without action. The Pensions Commission, revived by Prime Minister Keir Starmer last year, said the lack of saving risks leaving large groups facing a 'severe cliff-edge' when they retire.
The commission found that just 4% of self-employed workers are contributing to a pension, and 45% of working-age adults are not saving into a pension at all, despite nearly half of them being in work. Low and middle earners are most at risk, with around half saving only the minimum under automatic enrolment.
Under auto-enrolment, employers must place employees in a pension and contribute a minimum of 8% of earnings, with the worker paying 5% and the employer 3%. However, the report highlights that about 30% of private pension pots are accessed at the earliest opportunity, with half of savings taken out in full, often spent on large expenses like cars or holidays.
The commission also revealed a significant gender gap, with women approaching retirement having on average half the private pension savings of men: a median of £81,000 versus £156,000. Chair Jeannie Drake called for a 'renewed national settlement on pensions' to ensure adequate retirement income.
The interim report warns that millions more could become reliant on state support unless action is taken. Pensions Minister Torsten Bell said: 'Britain has got back into the pension saving habit, but the job is only half done with tomorrow’s pensioners still on track to be poorer than today’s.' The commission is expected to publish final recommendations next year.
