DWP to bring back Pensions Commission to help people save enough money for retirement
The UK Government is set to resurrect the Pensions Commission amid fears that today's workers face a greater risk of poverty in retirement than their parents. Experts have warned that people looking to retire in 2050 are on course to receive £800 per year less than current pensioners.
The Department for Work and Pensions (DWP) said 45 per cent of working-age adults were putting nothing into their pensions. Work and Pensions Secretary Liz Kendall said she was turning to the Pensions Commission, which last met in 2006, to 'tackle the barriers that stop too many saving in the first place'.
The previous commission recommended automatically enrolling people in workplace pensions, which has seen the number of eligible employees saving rise from 55 per cent in 2012 to 88 per cent.
DWP analysis suggested 15 million people were under-saving for retirement, with the self-employed, low paid and some ethnic minorities particularly affected. Around three million self-employed people are said to be saving nothing for their retirement, while only a quarter of people on low pay in the private sector and the same proportion from Pakistani or Bangladeshi backgrounds are saving.
Women face a significant gender pensions gap, with those approaching retirement in line to receive barely half the income that men can expect.
Work and Pensions Secretary Liz Kendall 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."
Pensions minister Torsten Bell 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 Pensions Commission to finish the job and give today's workers secure retirements to look forward to.'
The commission will be led by Baroness Jeannie Drake, a member of the previous commission, and report in 2027 with proposals that stretch beyond the next election.
Ms Kendall's decision to revive the Pensions Commission has been broadly welcomed by the pensions industry.
Kate Smith, head of pensions at Aegon, urged the commission to make 'bold, brave and possibly unpalatable recommendations', including 'significant increases' to auto-enrolment contributions after 2029.
She also called on the commission to look at wider issues, saying: 'Sources of inequality and affordability are often linked to the way the labour market works, the housing market and societal norms, such as women taking on most of the caring responsibilities.
'These are not issues that can be addressed by pensions policy alone.'
AgeUK's Caroline Abrahams said the commission needed to address the State Pension, which provides the bulk of retirement income for most pensioners.
She said: 'If we're to avoid future generations of pensioners experiencing financial hardship, we need reforms that enable more people to build a decent standard of living, and we need them sooner rather than later to maximise the numbers who can be helped.'
Ministers hope the Pensions Commission will build a consensus around changes, as its predecessor did, working with businesses and trade unions.
Paul Nowak, general secretary of the Trades Union Congress, said: 'Far too many people won't have enough pension for a decent retirement, and too many – especially women, BME (black and minority ethnic) and disabled workers and the self-employed – are shut out of the workplace pension system altogether.
'That's why this Pensions Commission – which will bring together unions, employers and independent experts – is a vital step forward.'
But shadow chancellor Sir Mel Stride accused Labour of pushing the issue 'into the long grass'.
The MP said: 'The reality is they have piled up burdens on employers and workers, and that is why they have launched a pensions commission which will take years to report back and will only look at changes beyond the end of this decade.
'Conservatives in government introduced automatic enrolment which has revolutionised our pensions landscape. We should be building on that success, but now businesses and savers cannot afford to put more into pension pots thanks to Labour's reckless policies.
'Under Labour, pensioners are regarded as cash cows. Which is why it has come as little surprise that Rachel Reeves is looking to raise taxes on pensioners to plug the black hole she has dug herself.'
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