Britain’s pensions commission has warned that 15 million people are not saving adequately for retirement, with the number set to rise to as many as 19 million unless action is taken. The warning, set out in details shared on Monday, says tomorrow’s retirees could end up worse off than those leaving work now.
The interim report says as many as 45% of working-age adults are not saving into a pension at all, while around half of low and middle earners are putting away only the minimum required under automatic enrolment. That system places workers into a pension and requires total contributions of 8% of earnings, with the worker paying 5% and the employer adding 3%.
The scale of the gap is largest among people outside the standard workplace system. Just 4% of wholly self-employed workers are saving for retirement, according to the commission. It also found that about 30% of private pension pots are being accessed at the earliest possible opportunity, and around half of those withdrawals are taken in full.
Nearly half of the money taken out early is spent on large expenses such as a car, a holiday or renovations. That points to a system in which pension savings are increasingly treated as a source of cash in midlife rather than a protected income for later life. The commission warned of a danger of leaving “large groups across the UK facing a severe cliff-edge when they retire”.
The findings come from a government-backed body of independent experts revived by Keir Starmer last year. The commission was first established under Tony Blair’s government in 2002 and is expected to publish a final report next year with recommendations for changes to government policy. Jeannie Drake, speaking for the commission, said the aim was a “renewed national settlement on pensions”, adding that the final report would address the need to secure adequate income in later life and a pension system fit for decades to come.
The report says low and middle earners are most at risk, and the picture is sharper for women approaching retirement. Their median private pension wealth is £81,000, compared with £156,000 for men, a gap that underlines how uneven retirement provision remains even before inflation and living costs are taken into account. The commission’s conclusion is blunt: without changes, the UK faces a shortfall in retirement saving that will hit millions and may require a radical shake-up of the pensions system.
