Pensions 2050: Evidence and future priorities
The second Pension Commission’s interim report provides a clear and urgent call to action. It describes a system in which, although participation rates in workplace pensions have doubled due to auto-enrolment, up to 19 million working age people are not on track to meet the retirement income targets set by the first Pension Commission.
The triple locked flat-rate State Pension provides a firm foundation on which retirement incomes are built, and auto-enrolment has more than doubled the numbers in workplace pensions. But minimum contributions rates are too low to provide an adequate retirement income for most workers, and those on lower incomes or at smaller companies are unlikely to get contributions significantly above this rate. At the same time millions of workers remain excluded from workplace pensions all together, either through low pay, or because they are in self-employment or insecure work.
These problems of low pay and lack of access to workplace pension schemes are not distributed evenly across the population. The interim report sets out the ways in which women, disabled people, and black and ethnic minority people are at considerably higher risk of poor retirement outcomes.
Addressing these issues will require ambitious policy changes to bring more workers into auto-enrolment and increase contribution rates for those who are auto-enrolled. It will require reforms to pension schemes to ensure that they make the most of every pound of contribution received and efficiently provide retirement incomes that are stable and secure. And it will require changes to the State Pension and wider social security system to boost retirement incomes for those with spells out of paid work, and to provide greater protection for those unable to stay in work until their State Pension age.
In many of these areas the commissioners will have to balance competing factors. These include weighing calls to preserve flexibility at retirement against the need to ensure pensions provide an income for life, and keeping the overall system as simple as possible while making sure it meets the needs of different groups. Channelling more money into the pension system will also have an impact on workers during their working lives and on employers and the wider economy.
This response to the commission’s call for evidence addresses the main challenges set out in each chapter of its interim report.
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