Government warns that pensioners will be £800 a year poorer by 2050

Millions of people could benefit from a more secure retirement as the Government announced on Monday (21 July) that it will revive the landmark Pensions Commission to examine why tomorrow’s pensioners are on track to be poorer than today’s and make recommendations for change.

Government data shows retirees in 2050 are on course for £800 or 8% less private pension income than those retiring today. 4-in-10 or nearly 15 million people are undersaving for retirement.

This partly reflects too many working age adults (45%) saving nothing at all into a pension, with lower earners, the self-employed and some ethnic minorities particularly at risk.

• Over 3 million self-employed are not saving into a pension.
• Only 1-in-4 low earners in the private sector are saving into a pension.
• Just 1-in-4 of those from a Pakistani or Bangladeshi background are saving.

The data also reveals a stark a 48% gender pensions gap in private pension wealth between women and men. A typical woman currently approaching retirement can expect a private pension income worth over £5,000 less than that of a typical man (just over £100 per week for a woman compared to just over £200 a week for a man).

While the introduction of Automatic Enrolment increased the numbers saving, saving levels have often remained low. Around 1-in-2 workers in the private sector only save around the minimum contribution level (8% or less of earnings).

The relaunched Commission will explore the complex barriers stopping people from saving enough for retirement, with its final report due in 2027.

It will examine the pension system as a whole and look at what is required to build a future-proof pensions system that is strong, fair and sustainable.

“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,” said Work and Pensions Secretary Liz Kendall.

“The Pensions Commission laid the groundwork, and now, two decades later, we are reviving it to tackle the barriers that stop too many from saving in the first place,” she said.

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