Insurance and pension industry figures have called for sharper reform after the UK Pensions Commission warned that tomorrow's retirees are on course to be financially worse off than today's, with lower earners, part-time workers and the self-employed identified as the most exposed cohorts.
The commission found that around 15 million working-age adults are under-saving for retirement, a figure that could rise to 19 million without intervention. About 45% of working-age adults, or roughly 18 million people, are not saving into a pension at all, despite nearly half of them being in work.
Around half of low and middle earners are saving only at minimum auto-enrolment levels, while about 3 in 10 private pension pots are accessed at the earliest opportunity. Half of those are taken in full, often spent on cars, holidays or home renovations. A final report with policy recommendations is due in early 2027.
David Brooks (pictured above, left), head of policy at consultancy Broadstone, said the findings were a stark reminder of the UK's pension savings challenges, particularly for lower earners and the self-employed.
Brooks said too many people were saving too little, or not at all, which would create a significant financial issue at retirement. He added that the interim report bucked 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," Brooks said.
He flagged concerns around how quickly savers were accessing their pensions and the proportion fully encashing their pots, leaving them vulnerable to running out of money later in retirement.
Brooks said increasing minimum automatic enrolment contribution rates would inevitably form part of the debate but was unlikely to be a panacea given budgetary pressures on households.
Mark Futcher (pictured above, middle) of Barnett Waddingham, part of Howden, said it was reassuring the commission was focused on the right issues but argued it now needed to accelerate its work, with lower earners, part-time workers and the self-employed continuing to be left behind.
Futcher cited internal research showing that while 65% of employees at medium-sized firms believe they will retire comfortably, only 24% have set clear financial goals and 60% do not know where their pension is or what it holds.
"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," he said, adding that the commission's final recommendations in 2027 could not pull any punches.
Pete Glancy (pictured above, right), head of pension policy at insurance group Scottish Widows, said auto-enrolment worked because it was bold rather than 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," Glancy said, arguing the cohort needed flexible products with a default opt-out mechanism.
Glancy said the commission was right to look at supporting over-50s in the workforce, though half of those in poor health already face pension poverty.
Scottish Widows' latest Retirement Report found that 31% of people, or 12.2 million, face pension poverty, an improvement from 39%, or 15.3 million, in 2025.
Boosting auto-enrolment contributions would drive that figure down to 13%, while raising total contribution rates from 8% to 12% on the first £30,000 of salary would lift projected retirement savings by £40,000 on average.
