Employers need to prepare for major pension reforms over the next ten years, with inadequate defined contribution (DC) savings set to become the biggest challenge, a report has warned.
Research in the Pensions UK report, titled ‘2030 Ready: The Industry Lens’, revealed that 44 percent of its members expect very significant change in the industry by 2035, while 28 percent anticipate transformation within just five years.
Changes will be driven by legislation, such as the Pensions Schemes Bill and the Pensions Commission outcomes, and digital developments including the roll out of pensions dashboards, the ongoing rise of AI and better use of data analytics.
In the face of such sweeping transformation, the research found that 77 percent of respondents said they are confident the industry will successfully adapt, and 22 percent are extremely or very confident.
For employers, the findings point to growing pressure to help staff prepare for retirement as the next decade will bring new demands for retirement education, pension communication, and financial wellbeing initiatives. Three-quarters (74 percent) of survey respondents believe that inadequate DC outcomes will be the sector’s biggest concern in the 2030s.
Employers who prepare early will be best placed to support their workforce and protect their long-term reward strategy.
Experts cited in the report anticipate that more people will work longer than planned or retire with insufficient income as reliance on DC pensions grows and defined benefit (DB) support declines.
The research also highlights concerns about the sustainability of the State Pension and the future of the Triple Lock, issues that could have a direct impact on how employers design workplace pension schemes and financial education strategies.
When asked what they would most like to change, 23 percent of respondents called for reform of contribution levels, adequacy and automatic enrolment, while 15 percent prioritised improved defaults and retirement options, political stability and clearer communications.
Technology was identified as the biggest opportunity for improvement, with 62 percent of members highlighting the potential of digital innovation (including the Pensions Dashboard, AI and data analytics) to deliver more personalised retirement planning and improve engagement. However, 27 percent feared that technology may fail to drive positive behaviour change.
Zoe Alexander, executive director of policy and advocacy at Pensions UK, said: “Now is the time to get ahead of change and shape the next decade for the pensions sector. Our 2030 Ready: Industry Lens report brings together the views of members and wider industry experts, giving a detailed picture of the challenges and opportunities ahead.
“The momentum created by the Pensions Schemes Bill and the Pensions Commission provides a once-in-a-generation opportunity for the industry to support government in driving change that really works for savers, shaping regulation and championing innovation to make the most of the possibilities ahead.”
The survey of 110 members, which represent schemes with assets under management ranging from under £5m to over £20bn, found that 88 percent believe their organisation can respond to major industry shifts by 2030, though only 5 percent said they are fully prepared.
