A pensions group is set to be relaunched by Labour amid fears workers are not saving enough for retirement. The Pensions Commission, an independent body which last met in 2006, will look at the long-term future of the pensions system.
It comes as new analysis by the Department for Work and Pensions (DWP) shows that people looking to stop working in 2050 are on course to receive £800 per year less than current pensioners, while almost half of working-age adults are putting nothing into their pensions. Work and Pensions Secretary Liz Kendall said: “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.
“The Pensions Commission laid the groundwork, and now, two decades later, we are reviving it to tackle the barriers that stop too many saving in the first place.”
Age UK said the commission needed to address the state pension, which provides the bulk of retirement income for most OAPs.
Charity director Caroline Abrahams said: “If we’re to avoid future generations of pensioners experiencing financial hardship, we need reforms that enable more people to build a decent standard of living, and we need them sooner rather than later to maximise the numbers who can be helped.
“There’s no getting away from the fact that the state pension provides the bulk of retirement income for most pensioners, with 1.1 million (13%) receiving all their income from the state.
“It’s therefore hugely important to consider the future of the state pension alongside the role of private savings, as only once this is clear will it be possible to say with any accuracy how much people need to put aside to attain a decent standard of living once, they retire.”
Morgan Vine, director of policy and influencing at Independent Age, said the new Pensions Commission was an “important opportunity to make sure that future pensioners have an adequate income so they can live a dignified later life”.
But she added: “We are disappointed that the review will not include a focus on the incomes of people currently over state pension age.
“Every day our advisers hear about the difficult decisions older people on a low income are making to survive, including skipping meals and reducing the number of showers they take to save money.
“We urge the UK Government not to forget the almost two million older people currently living in poverty and the further one million hovering just above the line and put in place tangible changes to support them too.”
The previous commission recommended automatically enrolling people in workplace pensions, which has seen the number of eligible employees saving rise from 55% in 2012 to 88%.
DWP analysis suggested 15 million people were undersaving for retirement, with the self-employed, low-paid and some ethnic minorities particularly affected.
Women face a significant gender pensions gap, with those approaching retirement in line to receive barely half the income that men can expect.
The commission will be led by Baroness Jeannie Drake, a member of the previous commission, and report in 2027 with proposals that stretch beyond the next election.