Mel Stride revives Pensions Commission to tackle UK retirement shortfall

• DATE: 10 10 25
• BY: Caelum Harrison

On revival of the Pensions CommissionLondon this Friday, the UK government announced a bold step to curb a looming retirement crisis.

When Mel Stride, Work and Pensions Secretary outlined the plan, he stressed that the new commission would dig into the "complex barriers" keeping millions from saving enough for life after work. The Department for Work and Pensions set a 2027 deadline for the final report, marking the first major review since the original 2005 Pensions Commission published its now‑classic findings.

Why the Commission Matters: A brief history

The 2005 commission warned that an ageing population and low contribution rates could leave future retirees "significantly worse off". Back then, the forecast was that by 2030, private pension income would be 5% lower than in the early 2000s. Fast‑forward two decades, and the numbers look a lot scarier.

New government analysis shows a projected £800 (about 8%) drop in private pension income for retirees in 2050 compared with those retiring in 2025. In plain terms, a typical retiree could end up with roughly £5,000 less a year than they expected.

The new findings and stark projections

Four‑in‑ten working‑age adults – roughly 15 million people – are currently undersaving for retirement. Even more alarming, 45% of adults aged 16‑64 are saving nothing at all into a pension.

• Over 3 million self‑employed workers have no pension contributions.
• Only 1‑in‑4 low‑earners in the private sector are saving.
• Just 1‑in‑4 people from Pakistani or Bangladeshi backgrounds are contributing.
• The gender gap in private pension wealth stands at 48%; a typical woman expects about £5,000 less per year than a man.

Automatic Enrolment, introduced in 2012, lifted participation, but most workers are still contributing at the bare minimum – 8% of earnings or less. Roughly half of private‑sector employees sit at that floor.

According to Standard Life's 2025 Retirement Voice report, 53% of UK adults worry they aren't saving enough, yet only 15% rank pension saving as a top financial priority.

Stakeholder reactions: Voices from the front line

"The Retirement Voice report gives us a sharp picture of how people are feeling," said Catherine Foot, director of the Standard Life Centre for the Future of Retirement. "The gap between hopes and expectations reflects real financial pressure, especially for low‑income households and ethnic minorities."

Industry body Pensions UK warned that without intervention, over half of future savers will miss the retirement income targets originally set by the 2005 commission. Their "Five Steps to Better Pensions" paper calls for a minimum contribution of 12% under Automatic Enrolment and for contributions to start at age 18 rather than 22.

Those recommendations were echoed by Nigel Peaple, former director of policy at Pensions UK, who praised the government's recent tweak to start contributions from the first pound of earnings.

Policy options on the table

The revived commission will evaluate a menu of reforms, including:

1. Raising the Automatic Enrolment floor to 12% of earnings.
2. Mandating contributions from the first pound of pensionable income.
3. Lowering the entry age for contributions from 22 to 18.
4. Introducing a gender‑equalising incentive, such as tax credits for women’s contributions.
5. Targeted outreach to self‑employed workers, perhaps via a simplified “micro‑pension” product.

Economic modelling from the Institute for Fiscal Studies suggests that a 12% contribution rate could shave the projected £800 shortfall by nearly half, assuming average salary growth of 3.5% and a 5% investment return.

Looking ahead: 2027 and beyond

By the time the commission hands over its final report in 2027, the state pension age will have risen from 66 to 67, a change slated for 2026‑2028. Public awareness remains low – only 18% of adults correctly identify the current state pension age.

If the commission’s recommendations are adopted, the next generation of workers could see a more robust safety net, narrowing the retirement expectation gap that now stretches five years (preferred age 62 vs expected age 67).

For now, the key takeaway is clear: without decisive action, the UK risks a wave of under‑prepared retirees, a strain on the tax base, and a deepening gender and ethnicity‑based pension divide. The revived commission could be the catalyst needed to turn the tide.