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Pensions

Resurrecting the Pensions Commission to Address Rising Retirement Poverty

Strategic Insights

— 1 min read

The UK government has announced plans to resurrect the Pensions Commission, amidst growing concerns that today's workers are at risk of poverty in retirement. Experts warn that individuals approaching retirement in 2050 are expected to receive £800 per year less than current pensioners, highlighting the urgent need for reform. With 45% of working-age adults not contributing to their pensions, the Department for Work and Pensions (DWP) aims to tackle the barriers preventing many from saving.

Key Takeaways:

  • The Pensions Commission is being revived to address rising retirement poverty, with experts warning that individuals approaching retirement in 2050 may receive £800 per year less than current pensioners.
  • 45% of working-age adults are not contributing to their pensions, with the self-employed, low-paid, and some ethnic minorities particularly affected.
  • Women face a significant gender pensions gap, with those approaching retirement expected to receive barely half the income that men can expect.
  • The commission will be led by Baroness Jeannie Drake and report in 2027 with proposals that stretch beyond the next election.
  • Pensions minister Torsten Bell aims to finish the job of getting pension saving up and pensioner poverty down, while Work and Pensions Secretary Liz Kendall hopes the commission will tackle the barriers to saving in the first place.
  • The commission will consider making "bold, brave and possibly unpalatable recommendations", including significant increases to auto-enrolment contributions after 2029.

Statistics:

  • 45% of working-age adults are not contributing to their pensions.
  • Individuals approaching retirement in 2050 are expected to receive £800 per year less than current pensioners.
  • Around 3 million self-employed people are not saving for their retirement.
  • Only a quarter of people on low pay in the private sector and the same proportion from Pakistani or Bangladeshi backgrounds save for retirement.
  • Women approaching retirement are expected to receive barely half the income that men can expect.

Sources:

  • City A.M.: "Mansion House: UK giants to agree to pick high-return pension schemes"
  • Department for Work and Pensions
  • Liz Kendall, Work and Pensions Secretary
  • Pensions minister Torsten Bell
  • Baroness Jeannie Drake
  • Kate Smith, head of pensions at Aegon
  • Caroline Abrahams, AgeUK
  • Rain Newton-Smith, chief executive of the Confederation of British Industry
  • Paul Nowak, general secretary of the Trades Union Congress
  • PA: "UK government to resurrect pensions commission to tackle retirement poverty"

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