The Pensions Commission has issued a stark warning that approximately 15 million people across the United Kingdom are currently under-saving for their retirement. The body has urgently called for a fresh “national settlement” to address the growing crisis in pension provision, highlighting that significant groups face a “severe cliff-edge” when they stop working.
Key Groups at Risk
Women, low and middle-income earners, and the self-employed are identified as particularly at risk of financial insecurity in later life. Without decisive action, the number of individuals inadequately preparing for retirement could escalate to 19 million, the commission warns. This widespread under-saving also risks millions more becoming reliant on state support during their retirement.
Demographic Pressures
In its interim report, the commission stated: “The forces reshaping our society – longer retirements, slower growth, and falling home ownership – demand a renewed national settlement on pensions.” The share of the population over 65 is projected to reach 28% by 2075, up from 19% today. The number of people aged 75 or over is expected to double between 2025 and 2075, a rise of six million. Spending on pensioner benefits is projected to grow from around 6% of GDP in 2024-25 to around 9% by the early 2070s.
Automatic Enrolment Gaps
Many people do not have salary-based pensions to rely on, as these have become less common. Instead, they bear the risk of how much money they will end up with, based on contributions and fund performance. Some groups are left out of automatic enrolment into workplace pensions, such as those earning below the £10,000 earnings “trigger” and the self-employed. The Commission said just 4% of wholly self-employed workers are saving for retirement.
Gender and Inequality
Although the share of women with private pension wealth has grown significantly, median uncrystallised private pension wealth in people’s late 50s was £156,000 for men and £81,000 for women (48% less). Pension participation gaps are also a particular worry for carers, people with disabilities, and some ethnic minorities.
Working Longer and Other Solutions
The report said that working longer – and in particular reducing labour market inactivity among people in their 50s – is a necessary part of achieving adequate incomes in retirement. However, longer working lives can only be part of the answer and are easier for some people than others. There are also concerns about people running down their pension pots too early; on current trends, about three in 10 private pension pots are accessed at the earliest possible opportunity.
Next Steps
A final report with recommendations will follow in early 2027, and the Commission wants to hear views from interested parties. Pensions commissioner Baroness Jeannie Drake said that achieving a renewed national settlement “will require clarity of purpose, but it also offers a moment of opportunity; to renew a social contract that commands confidence across the country.”
Industry and Union Reactions
Minister for pensions 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.” Dr Yvonne Braun of the ABI said: “The report makes a powerful case for a new national settlement for pensions.” Rocio Concha of Which? noted: “The report rightly highlights that too many working people are projected to reach later life without sufficient savings.” Julian Mund of Pensions UK added: “We look forward to working with Government to explore how that diagnosis can be turned into a practical roadmap for reform.” TUC general secretary Paul Nowak stated: “Workers deserve a pension system that guarantees against poverty in retirement... The commission must now develop a bold plan to fix this.”
