The Pensions Commission and inequality in retirement
Can the Pensions Commission move beyond adequacy to address systematically unequal outcomes?
The debate over automatic enrolment reform highlights the difficulty of improving retirement outcomes for low earners. As fresh analysis from the Pensions Policy Institute makes clear, even widely supported changes involve trade-offs.
But perhaps the bigger question is whether the pensions system is trying to solve the right problem. Adequacy matters, but so too does the inequality built into retirement outcomes.
Pension adequacy is not simply a later-life financial issue, it’s about fairness, aspiration and social mobility. If under-saving is concentrated among those with the least room to manoeuvre, the system is not just storing up a retirement problem, it is entrenching disadvantage across generations.
What the new Pensions Commission is saying
The Department for Work and Pensions published its interim report Pensions 2050: Evidence and Future Priorities in May outlining critical UK retirement challenges including widespread under saving, and demographic shifts.
It recognised that “women, carers, the self-employed, and many ethnic minority groups continue to face structural barriers that the system has not yet overcome.” It also highlighted acute under-saving among low and middle earners, women and the self-employed and weaker outcomes for carers, disabled people and ethnic minority groups.
Crucially, it framed adequacy as a shared responsibility between the state, employers and individuals. It also accepted that automatic enrolment must evolve, while the State Pension remains the cornerstone of retirement income for most people.
The scale is substantial: around 15 million people (43% of the working-age population) are under-saving for retirement. The question is no longer whether there is a problem, but whether the response will be proportionate.
Looking ahead to 2027
In a diverse, multi-cultural society, retirement is not experienced in a single uniform way. The system cannot assume that people move neatly from education to full-time work, to retirement while building pension wealth in a straight line. For many, that path does not exist.
Some retirement plans may involve intergenerational support, property, overseas assets or savings outside formal UK pensions.
That makes the adequacy debate more nuanced. It is not just whether people are saving enough, but their motivations for saving or not saving. For some, low saving reflects conscious trade-offs. For others, it reflects constraint such as low or volatile income, caring responsibilities, unsuitable products, or low confidence in the system.
Regulation is raising expectations but preserving proportionality
The governance direction of travel, set out in consultation by the Department for Work and Pensions, points to higher standards, stronger oversight and greater focus on outcomes. It also stresses proportionality, while ensuring all schemes can manage modern risks.
Trustee expectations are also widening beyond technical pensions knowledge to include investment complexity, ESG, endgame strategy and digital capability, including AI and cyber risk. However, capability alone is not enough. Behaviour, in my opinion, is a key part, and it is important for us as an industry to understand if trustees are confident in their decision making or if decisions are being deferred or defaulting to familiar approaches. With this understanding, we can support boards in the right way.
Possible solutions: what the Commission should now test
If the final report is to matter, it must move beyond diagnosis, and test reforms proportionate to the scale of the problem.
- Finish automatic enrolment reform.
The 2017 review proposed lowering the age threshold and removing the lower earnings limit. The powers now exist, so why not implement it. - Correct the obvious structural distortions.
Policy makers already know many of the weak points: carers’ credits, the earnings trigger, tax relief for non-taxpayers, pension sharing on divorce, and the interaction between pensions and family policy. They deserve renewed attention. - Explore a tiered automatic enrolment contribution design.
Test a model where employee and employer contributions vary by earnings: lower earners would contribute less, with employers making up the difference, while higher earners would contribute more and employers less — with the minimum total contribution still met in all cases. - Design properly for the self-employed and for non-linear work.
The Commission should examine default or quasi-default mechanisms through the tax system and more portable savings pathways for people with fragmented careers. - Build a trusted guidance infrastructure for the AI era.
Public guidance, clearer signposting, and quality-assured digital tools will matter more, not less, as AI-generated financial content proliferates. - Be more honest about data blind spots.
Better qualitative research and engagement with communities whose saving behaviour is less visible would make the policy debate more grounded and less technocratic. - Ensure incoming pensions infrastructure work for savers – not just on paper.
The next wave of pensions reform must do more than exist in statute. It has to work in practice and be understood by savers and employers.
For more information on any of the issues tackled above, please contact Ieuan Solanki from our Equity, Diversity & Inclusion team.
To view the original, longer form article, please click here.
Please note this article was originally published with Pensions Expert.
