The government has reinstated the Pensions Commission to address concerns that many people retiring in the future will be worse off than pensioners today, with almost half of working age adults saving nothing at all into a pension.
Among those who are saving, four in ten (equal to nearly 15 million people) are undersaving for retirement, according to an analysis published by the Treasury and the Department for Work and Pensions.
The government said that if nothing changes, retirees in 2050 are on track to be £800, or 8 percent, worse off in terms of their private pension income than people retiring now.
A large proportion (45 percent) of working age adults are not saving anything at all into a pension, with groups such as lower earners, some ethnic minorities, and the self-employed particularly affected.
Government data shows that only a quarter of low earners in the private sector are saving into a pension, while just one in four people from a Pakistani or Bangladeshi background are saving.
The gender pensions gap also remains wide. The analysis out today shows it is 48 percent, with a typical woman approaching retirement expected to collect a private pension income worth £5,000 less than that of a typical man.
Legacy of the first commission
These concerning stats are the reason the commission has been revived. It was originally set up in 2006 to encourage people to save for retirement. It helped build a consensus for the roll out of pensions auto-enrolment with the legacy being that 88 percent of eligible employees are now saving, up from 55 percent in 2012 (the year AE was introduced).
However, while AE raised the number of people saving, the amounts being put aside often remain low. Around one in two workers in the private sector only save around the minimum contribution level (8 percent or less of earnings). This amount may be insufficient for a secure retirement. However, the government has reconfirmed that auto-enrolment employer contribution rates won’t be increased during this parliament.
In a bid to move the needle for a second time, the government has tasked the commission with exploring the complex barriers that block people from saving enough for retirement and to assess which policies are required to build a “future-proof pensions system”. A final report is expected in 2027.
Liz Kendall, minister for work and pensions, said: “People deserve to know that they will have a decent income in retirement – with all the security, dignity and freedom that brings. But the truth is, that is not the reality facing many people, especially if you’re low paid, or self-employed.
“The Pensions Commission laid the groundwork, and now, two decades later, we are reviving it to tackle the barriers that stop too many saving in the first place.”
Chancellor Rachel Reeves said: “We’re making pensions work for Britain. The Pension Schemes Bill and the creation of pension megafunds mean an average earner could get a £29,000 boost to their pension pots. Now we are going further to ensure that people can look forward to a comfortable retirement.”
Torsten Bell, pensions minister, said: “The original Pensions Commission helped get pension saving up and pensioner poverty down. But if we carry on as we are, tomorrow’s retirees risk being poorer than today’s. So we are reviving the commission to finish the job and give today’s workers secure retirements to look forward to.”
Emma Douglas, wealth policy director at Aviva, welcomed the second stage of the commission, saying that progress in narrowing the gender pensions gap has been slow, and without action, parity could remain decades away.
“Aviva’s pension contribution data (June 2025) highlights a concerning trend: mid-life women are facing a widening pension gap. Over the past four years, the gap for women aged 30 to 45 has grown by an average of 3 percent,” Douglas said.
Call for auto-enrolment roadmap
“Auto-enrolment reforms offer a valuable opportunity to accelerate change. To ensure success, we urge the government to set out a clear roadmap detailing how and when these reforms will be implemented. A phased approach will give employers and savers the time they need to prepare – helping to secure better retirement outcomes for millions of workers.”
Jamie Jenkins, director of policy at Royal London, said: “The Pension Schemes Bill largely sets out the strategic direction for retirement saving over the next five years. The formation of a new commission will allow us to look beyond 2030 and consider how we improve retirement saving further in the decades ahead, considering the balance between state provision and private saving, and the role that savers themselves play in planning for their retirement.
“While now might not be the right time to raise contribution levels, given other financial pressures, we can’t ignore the more daunting prospect of an increasingly large and widely undersaved population of people in retirement. So now is the time to make a plan to remedy this in future.”
He pointed to the government’s 48 percent gender pensions gap in private pension wealth and said it echoes insight in Royal London’s Financial Resilience Report. This report found that men have an average of £92,000 in their pension pots, while women have only £39,000.
“We know that more than half (54 percent) of women say they do not feel confident when saving for retirement, compared to 41 percent of men,” he added.
“We need certainty on the long-term direction of travel for private and State pensions and to ensure the system works well for everyone, so the commission’s promise to look at the complex reasons underpinning why people are not saving enough and make recommendations to address this are very welcome.”
Julian Mund, chief executive of Pensions UK, said his organisation supports the government’s ambition with its revival of the commission 20 years on.
He said: “There is a significant job to finish: Pensions UK research shows one in five working households are on course to fall short of the income needed to meet the minimum retirement living standard. Higher pension contributions must become the norm, with more people brought into saving, and a state pension that always protects against poverty.
“We are currently undertaking research to explore how building more flexibility into the automatic enrolment system might deliver better outcomes overall, as an input to this work.
“Pensions UK has a clear purpose: to help everyone achieve a better income in retirement. We are optimistic the commission will make real strides towards delivering a pension system that is adequate, affordable and fair, and stand ready to lend our expertise to the review panel as they tackle these vital issues.”
Pete Maddern, managing director for retirement at Canada Life, said: “There are many complex behavioural, social, and financial barriers that prevent people from adequately preparing for later life, and this needs to be understood and addressed before it’s too late. The reality is that people are living longer – and while this is something to be celebrated, it also means retirement income needs to stretch further than ever before.
“In today’s evolving retirement landscape, it’s also more important than ever for individuals to take a holistic view of their future finances. Security in later life doesn’t rest on one income stream alone. The state pension, private pensions, savings, property, and guaranteed income products like annuities all have a role to play. Supporting people in understanding how to bring these elements together effectively is a crucial step toward delivering long-term financial resilience.”
Jonny Haseldine, head of corporate governance and business environment policy at the British Chambers of Commerce, said: “Too few people are saving enough for retirement, affecting millions of employees and the firms we represent. Businesses want to help their staff make the right decisions for their financial futures.
“We welcome the launch of the new Pensions Commission – which is a timely and necessary next step from the original commission over two decades ago.
“It is essential we have a pensions system that supports both employees to build up savings and employers in managing costs. That’s even more crucial in the current economic climate.
“We also welcome the reiterated commitment that employer contribution rates won’t be increased during this parliament. Any future rises in minimum contributions must be gradual and paused if economic conditions worsen, giving business time to adjust to increased costs,” he said.
NatWest Cushon director of policy and research Steve Watson commented: “Further assessment and exploration of pensions adequacy is the biggest priority for the government when it comes to retirement policy change. It’s great to see dedicated focus and progress on this crucial issue because the impact of all the other good initiatives is massively reduced if people aren’t saving enough for their retirements.”
He said: “There’s a sort of inevitability the commission will find that minimum contributions need to be dialled up if the UK is going to better prepare itself for retirement. But adequacy isn’t simply about legislating for increased contributions. We understand household finances are tight and it’s the same for employers, so as an industry we can’t just wait for minimum contributions to increase, we need to do more to engage people with their pensions. Engaged people are more likely to make better decisions, including voluntarily increasing their contributions.
“This is where investing in UK private markets can really help, especially for younger savers. Not only is the investment case strong, but these types of assets can create emotional connections, which is the starting point for increased engagement.”
