Labour is resurrecting the Pensions Commission to address the growing concerns that a significant portion of the workforce is not saving enough for retirement. With a rising number of workers at risk of financial hardship in their later years, the commission aims to find solutions to ensure more secure retirements for future generations.
According to experts, workers approaching retirement in 2050 may receive up to £800 less per year than current pensioners. This worrying trend has prompted the Department for Work and Pensions (DWP) to take action. The government believes that the commission’s review will help alleviate concerns and create a fairer retirement system.
Commission’s Role in Improving Pension Savings
The revival of the Pensions Commission follows concerns that too many workers are not saving enough for retirement.
According to data from the DWP, 45% of working-age adults are not contributing to their pensions, a situation that could worsen over the coming decades. One of the commission’s key tasks will be tackling the barriers preventing people from saving, as well as exploring ways to increase contributions across the population.
In 2006, the original Pensions Commission helped drive forward the automatic enrolment system, which has since seen a rise in pension savings from 55% in 2012 to 88% of eligible employees.
Now, with projections indicating that 15 million people are under-saving for their retirement, the commission’s work has become even more urgent. Among those particularly affected are the self-employed, lower-paid workers, and ethnic minorities.
According to the DWP, around three million self-employed individuals are saving nothing for retirement, highlighting a serious gap that needs addressing.
Gender and Socio-Economic Disparities in Retirement Savings
Another crucial issue the Pensions Commission will address is the significant gender pensions gap. Women approaching retirement are expected to receive only about half of the income men are likely to enjoy.
This disparity stems from various factors, including women’s more frequent career breaks due to caring responsibilities, which impact their ability to accumulate pension savings.
Additionally, low-paid workers in the private sector and individuals from certain ethnic backgrounds, such as those of Pakistani and Bangladeshi descent, are also particularly vulnerable.
According to the report, only a quarter of people in these groups are saving for their retirement. The commission’s task will be to ensure that these groups are not left behind in the pursuit of a more inclusive and equitable pension system.
By tackling these disparities, the Pensions Commission has the potential to create a more sustainable and fair system that can provide future retirees with better financial security.
