Marvin OnumonuThe Pensions Commission has published its interim report on retirement saving in the UK, highlighting that 15 million people are undersaving and warning this could rise to 19 million without action.
The report found low and middle earners, the self-employed and women are most at risk, with 45% of working-age adults not saving into a pension.
Only 4% of wholly self-employed workers are saving for retirement.
Baroness Jeannie Drake, Pensions Commissioner, said: “Over the past two decades since the Turner Commission there is no doubt pensions reform can be described as a success.
“Yet the second Pensions Commission is looking forward and seeing many people not saving enough and millions not saving at all.
“This demands a renewed national settlement on pensions. Achieving this will require clarity of purpose, but it also offers a moment of opportunity; to renew a social contract that commands confidence across the country.”
Drake added: “The recommendations we present in our final report will address the need to secure adequate income in later life and a pension system that is fit for decades to come.
“The Commission will set out the course to improving future outcomes whilst ensuring the system is fair and sustainable within and between generations.”
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.
“The Pensions Commission sets out clearly the scale of the challenge: not enough people are saving for retirement, and many of those that are aren’t saving enough.
“The Commission warns that without action millions more people could be at risk of becoming reliant on state support in retirement.”
REACTION:
Dr Yvonne Braun, director of long-term savings policy at ABI:
“The report makes a powerful case for a new national settlement for pensions. Automatic enrolment is a sturdy foundation, but must evolve to meet the scale of the challenges ahead.
“We and our members stand ready to work with the Commission to deepen saving, extend coverage and support better decisions in retirement, so that everyone can look forward to greater financial security in later life.”
Rocio Concha, director of policy and advocacy at Which?:
“Which? welcomes this interim report from the Pensions Commission and the valuable evidence it brings together on the UK’s pension adequacy challenge.
“It is very encouraging to see recognition of the need to increase private pension saving rates and coverage, while also acknowledging the financial pressures caused by the cost of living crisis.
“The report rightly highlights that too many working people are projected to reach later life without sufficient savings, and that women, carers, the self-employed and many ethnic minority groups continue to face structural barriers.
“It is also promising to see a strong focus on how to support people to use their pension savings throughout retirement.
“Which? looks forward to continuing to work with the Commission, industry and wider civil society groups to help drive the reforms needed so people are better prepared for retirement.”
Julian Mund, chief executive of Pensions UK:
“Pensions UK welcomes the breadth and ambition of this report, and shares the Commission’s view that we need a new national settlement on pensions.
“Evidence presented in the report clearly strengthens the case for more pension saving over longer working lives, alongside systemic change that delivers sustainable incomes – building on welcome reforms in the Pension Schemes Act.
“We look forward to working with Government to explore how that diagnosis can be turned into a practical roadmap for reform, well before the next generation fall short of the retirement incomes they expect and deserve.”
Caroline Abrahams, charity director at Age UK:
“We welcome this new report from the Pensions Commission, which provides an excellent analysis of the problems facing our pensions system today.
“This is the first and necessary step for ensuring the pensions system of the future enables tomorrow’s older people to have a decent standard of living.
“There’s a clear need to improve the way the State Pension and private pension systems work together; otherwise people on low incomes are at risk of falling through the cracks and hurtling towards their retirements without the required funds, or the time to make up the shortfall.
“We look forward to working with the Commission as it explores the best solutions for future pensioners.”
Louise Hellem, chief economist at CBI:
“The publication of the Pensions Commission’s interim report is an important step towards building a long-term framework that delivers adequate living standards in retirement.
“Getting this right requires the government, businesses and individuals all to play their role in supporting better saving.
“As the debate progresses, it is vital that retirement adequacy is considered hand in hand with the UK’s growth ambitions.
“Strong economic growth underpins sustainable pension outcomes by supporting employment and higher sustainable wage growth, enabling individuals to save, and driving stronger investment returns over time.
“It is only growth that can sufficiently reduce difficult trade-offs and maintain political, public and business support for change.”
Paul Nowak, general secretary at TUC:
“Workers deserve a pension system that guarantees against poverty in retirement and enables them to maintain their standard of living.
“Although millions more people are now building up workplace pensions, far too many on low and middle incomes are not heading for a decent retirement – with women, Black and minority ethnic and disabled workers, and those in the gig economy at highest risk.
“The Commission must now develop a bold plan to fix this, which will need to include higher employer contributions and a fair deal for those currently missing out.”
Nausicaa Delfas, chief executive of The Pensions Regulator:
“The pensions system is still unfinished business with too many people on track for an inadequate retirement income.
“That is why we welcome the Pensions Commission report, and look forward to continuing to work with the Commission, Government and industry to create a system which delivers what matters most: a sustainable income in retirement for everyone.”
Brian Byrnes, director of personal finance at Moneybox:
“This report is a stark but important illustration of the retirement challenges facing around 15 million people across the UK, and reinforces why retirement adequacy cannot be solved through pensions policy alone.
“One of the clearest findings is the growing link between declining home ownership and poorer retirement outcomes.
“Research consistently shows the vital importance of housing security in retirement, with outright homeowners needing significantly smaller pension pots to maintain their standard of living in later life compared to private renters.
“Helping more people onto the property ladder earlier in life needs to be viewed as part of the long term strategy for supporting people in retirement.
“Our own data shows that a Moneybox Lifetime ISA was used by a first-time buyer to purchase their first home roughly once every ten minutes in 2025.
“The more people we can help achieve housing security earlier in life, the more progress we make tackling the structural challenges highlighted in this report.
“It is disappointing that the report does not reference the Lifetime ISA as part of the solution set. It is one of the few products designed to support both homebuying and long term financial resilience.
“After purchasing a home, savers can continue using it to build retirement savings, benefiting from compounding and government bonuses over time.
“That is especially important for the self-employed, who remain largely excluded from automatic enrolment despite, as this report clearly states, facing some of the biggest retirement risks.”
David Brooks, head of policy at Broadstone:
“The Pensions Commission’s findings are a stark reminder of the UK’s pension savings challenges, which are particularly acute for lower earners and the self-employed.
“Too many people are either saving too little or not saving at all which will create a significant financial issue at retirement.
“However, the Interim Report also bucks the trend of received wisdom around the success of auto-enrolment and the benefits of pension freedoms.
“Millions of people are still sitting outside of the confines of auto enrolment, even those who are in a job, while many of those who are saving are not contributing adequately.
“There are concerning findings around how quickly people are rushing to access their pension and the proportion who are fully encashing their pot, leaving them vulnerable to running out of money later on in retirement.
“The Report suggests that there is significantly more work to be done across the pensions industry to provide innovative solutions for millions of people – especially lower earners and the self-employed – to bring them into the system and begin to support their pension saving journey.
“While increasing minimum automatic enrolment contribution rates will inevitably form part of the debate, this is unlikely to be a panacea given the current budgetary pressures facing many households.
“Encouragingly, there is already a broad package of reforms that have just been passed into Law which aim to deliver better value for money for pension savers as well as improving awareness, engagement and outcomes.”
Pete Glancy, head of pension policy at Scottish Widows:
“Auto-enrolment worked because it was bold, instead of tinkering around the edges. There’s an urgent and pressing need to extend an auto-enrolment equivalent to the 96% of self-employed workers not currently saving into a pension.
“Pensions as we know them won’t work for the self-employed – we need flexible products that sit alongside other savings and investments with a default ‘opt-out’ mechanism.
“The commission is right to look at supporting over 50s in the workforce, but half of those in poor health already face pension poverty.
“Extending working lives will require a joint effort between Government, employers and the healthcare sector to ensure that everyone is able to contribute to the economy whilst boosting their financial futures.”
Mark Futcher, head of pension policy at Barnett Waddingham, part of Howden:
“It’s reassuring that the Pension Commission is focused on the right issues – but it now needs to put its foot on the pedal.
“Too much time has already been spent diagnosing the same problems, while lower earners, part-time workers and the self-employed continue to be left behind by the pensions system.
“And for everyday workers, our research highlights just how wide the gap between confidence and reality has become.
“While 65% of employees at medium-sized firms believe they’ll retire comfortably, only 24% have set clear financial goals and 60% don’t know where their pension is or what it holds – a clear sign that too many people are putting their retirement on autopilot and hoping it lands safely.
“With so much to tackle, there’s a valid concern that not everything can be fixed overnight.
“Nevertheless, the Commission’s final recommendations in 2027 cannot pull any punches.
“We can’t keep staring at the same problems year after year – it’s time for decisions that genuinely move the dial on retirement outcomes.”
