Policy submission

Pensions Commission Call for Views - Which? response

Which?'s response to the Pensions Commission's Call for Views following the release of their interim report - Pensions 2050: evidence and future priorities - setting out the challenges that the UK's pensions system is facing out to 2050
2 min read
Olivia WoodSenior Policy Adviser
  • We welcome the Pension Commission’s Interim Report. It provides a critical evidence base for the state of pensions adequacy in the UK and highlights urgent areas for concern in the current system.  
  • We agree that the current automatic foundation is solid, but needs strengthening for the long term. We support the four priority areas the Commission identifies for reform.  
  • We agree that the metrics used to design and evaluate retirement adequacy need updating, and we support the transition toward a hybrid adequacy measure. We consider that this could be further strengthened by developing measures that differentiate between home owners and renters, ground baseline measures in savers’ lived realities, and more clearly differentiate between ‘adequate’ and ‘aspirational’ targets. 
  • We strongly support the Commission’s call to re-evaluate the balance between default and voluntary saving. Auto enrolment works precisely because it is a default that requires no decision-making. To assume savers will make the active choice to contribute additional savings voluntarily goes against this foundational logic. The default system, comprising the State Pension and automatic workplace contributions, must therefore be set at a level that is sufficient for most people to secure a decent, adequate retirement income.
  • As the Commission begins to develop its final report, it should be bold and tackle the complex issues that have been highlighted head on and respond to consumers’ realities by focusing on structural change.
  • Which? makes five structural recommendations to address the identified issues with private pensions saving, coverage and decumulation. These are: 
    • Set out a timetable to increase minimum contribution rates and remove the lower earnings limit, with additional measures to mitigate the impact on low earners.
    • Remove the £10k trigger for automatic enrolment, in tandem with the recommendation above.
    • Establish the criteria that would trigger the lowering of the automatic enrolment age threshold from 22 to 18.
    • Create a minimal-friction pension solution for the self-employed.
    • Introduce hard default decumulation pathways, akin to automatic enrolment, at retirement.
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