The UK Pensions Framework(3), sponsored by Aviva, tracks and simulates how the UK pension system is performing against a set of core objectives, centring around Fairness, Adequacy and Sustainability, that determine the financial security people have in later life.
For the first time since its inception in 2022, the Framework Wheel has undergone a comprehensive refresh, with only 3 of its 41 indicators showing improvements, and another 3 weakening. Each indicator contains quantitative and qualitative metrics that are used in combination to assign a score out of six. This is used to classify the extent to which outcomes are providing support for their system objective.
The key findings of the Pensions Framework 2025 are:
Indicators that improved:
• (A4.2) Home Ownership - Pensioners continue to have the highest levels of home ownership, while ownership rates among working-age individuals remain lower. However, housing affordability has improved since the peak of the affordability ratio during the COVID-19 pandemic, returning to levels similar to those seen around a decade ago.
• (S2.1) Fiscal Sustainability - UK public spending on State Pension and other pensioner benefits has risen at a slower rate than the total received in National Insurance Contributions (NICs) since 2015-16. Trends in spending in relation to NICs and Gross Domestic Product (GDP) suggest that measures designed to improve sustainability are beginning to take effect. This indicator is measured differently to the Office for Budget Responsibility’s latest assessment on Fiscal risks and sustainability.
• S2.2 Scheme Sustainability - Schemes are well funded with the majority of DB schemes in surplus. The increase in members brought about by automatic enrolment has boosted the scale of DC schemes.
Indicators that weakened:
• (A1.1) Employment Rates - Employment rates are below record levels. The proportion of adult life spent in work has remained steady while life expectancy has edged upwards, meaning that today’s workers must save relatively more during their working years to achieve the same retirement outcomes.
• (A6.1) Change in Retirement Income - Since 2020/21 there has been a reduction in net-incomes such that 2022/23 incomes (i.e. the latest full-year data) were at around the same level as 2017/18 incomes in real terms.
• (S1.1) Longevity and Population Ageing - Falling healthy life expectancy following the COVID-19 pandemic, along with an increase in economic inactivity and population ageing, signal a risk to pension system sustainability.
Dr Priya Khambhaita, Head of Policy Research at The PPI and Lead Author of the UK Pensions Framework 2025 said: “A pensions adequacy review cannot come soon enough. Performance in the pensions system has stalled since 2022, and key objectives—adequacy and fairness—continue to be weak. The second phase of the pensions review must consider more flexible structures that support adequacy, while avoiding adverse impacts on different generations and underpensioned groups. The reform agenda so far has focused on improving investment returns and stimulating economic growth. However, savers can only benefit from investment performance if they save early and consistently. To prevent ongoing missed opportunities, the focus must now shift toward adequacy.”
Michele Golunska MD of Wealth and Advice at Aviva, commented: “We’re pleased to once again support the PPI’s important work through its latest UK Pensions Framework report. With major policy changes on the horizon through the Pension Schemes Bill, the industry has a unique opportunity to get ready for the future and to ensure the system works for every generation. At Aviva, we’re committed to playing our part to drive meaningful action and focus our collective efforts to deliver a pension system that serves all who depend on it, today and in the years ahead.”
PPI UK Pensions Framework 2025
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