Auto-enrolment reform
“Areas ripe for reform include increasing the level of contributions via auto-enrolment and the extension of auto-enrolment to younger workers. Lowering the age threshold would help embed positive savings habits early, giving more people a realistic chance of financial security in later life. However, reforms must be carefully calibrated to reflect the economic pressures facing young earners. Government support will be vital to ensure any changes are both effective and affordable. At the same time, any increase in contribution rates must be handled sensitively to avoid placing undue strain on businesses – particularly in the wake of recent changes to National Insurance Contributions. A staggered or phased approach may be necessary to give employers time to adjust, especially smaller firms already grappling with rising employment costs and tight margins.
Gender pension gap
“The Commission will confront the persistent gender pensions gap, which sees women approaching retirement with significantly less pension wealth than men – often less than half. This disparity is driven by a range of factors including lower lifetime earnings, career breaks for caring responsibilities, and unequal access to workplace pensions. Tackling this issue will require targeted reforms such as reviewing auto-enrolment thresholds, improving pension sharing on divorce and ensuring childcare support enables women to remain in the workforce.
Self-employed
“The Commission will try to address the persistent gap in pension saving among the self-employed. Only around 20% of self-employed individuals were contributing to a pension between 2018 and 2020 – compared to 80% of employees. This has been looked at previously with suggestions including leveraging the annual tax return as a practical mechanism to default the self-employed into pension saving, with the option to opt out.
“Another route that has been explored for the self-employed is to allow limited emergency access to pension savings, which is reported as an innovation the government has shown growing interest in. While this could encourage higher contributions by offering reassurance, it must be approached with caution. The pensions ‘sidecar’ model trialled by Nest showed promise, but engagement remained low. Diverting funds to a liquid pot risks undermining the long-term discipline needed to build adequate retirement savings.
State pension age
“On the state pension, the upcoming age review due by 2027 will be politically sensitive. Accelerating the rise to 68 may be necessary to protect sustainability, but must be justified with updated life expectancy data and a clear understanding of regional disparities. The triple lock, while out of scope for the Pension Commission, remains a fiscal pressure point – forecast to cost £15.5bn annually by 2030 according to the OBR. A broader review of pension adequacy and system sustainability is urgently needed.
“Finally, the proposed inclusion of pensions within inheritance tax rules by 2027 risks damaging public trust in pension saving. While few estates may pay more tax, many families could face unnecessary complexity and distress. We urge HM Treasury to consider a simpler, standalone flat-rate charge that meets policy goals without creating an administrative burden. The industry has offered workable alternatives. It’s time for the government to listen.
“Ultimately, people need to take responsibility for their own retirement and plan ahead, and taking professional advice or financial guidance earlier in life is a sensible step.”
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