Commenting on the IFS Report ‘Challenges for the UK pension system: the case for a pensions review’, Hannah English, Senior DC Consultant, Hymans Robertson says:

“We are pleased to see the IFS report, “Challenges for the UK pension system: the case for a pensions review” call for a review to tackle the challenge of future generations of pensioners having sufficient income in retirement. Whilst it is encouraging that there’s a clear timeframe to deliver policy recommendations by September 2025, it would be good to see early engagement with, and support from, the government to complete the review. This support from the government will be crucial for the effective implementation of any future policy change.

“We have always been supportive of policy interventions which have encouraged improved outcomes – including the introduction of AE and planned developments to include more individuals within this through the reduction in the starting age to age 18, as well as the removal of the offset to qualifying earnings (i.e. £6,240). However, these moves alone are not enough. Other measures will be needed to achieve an adequate income in retirement for pensioners.

“The report highlights the lack of saving amongst the self-employed which is good to see. However, the focus should also be on those away from work, e.g. those performing carer responsibilities, and we strongly suggest this is included within the review. Auto enrolment alone will not fix the pensions equality gap, nor pension poverty, if there is not an employer to enrol these individuals into a pension scheme.

“The report highlights low contribution levels of saving for those in the private sector across individuals of all income levels. Yet, increasing AE contributions levels above 8%, to levels of at least 12% or more, will have a more meaning impact on members’ accumulated funds.

“On the issue of the risk of pensioners managing their pots through retirement, a review to determine the best way to increase engagement and understanding of the risks couldn’t be more timely or relevant. A key driver to making the right choices will be through receiving adequate guidance. It is clear to see that Pension Wise is already having a positive impact on the members that do make use of the appointments. Future policy recommendations must be introduced to explore a trialling of an automatic booking of appointments with Pensions Wise for all individuals approaching retirement.

“Finally we note that the government alone will not be able to force all improvements in member outcomes through policy change. Engagement with providers to drive product innovation, employers to review scheme delivery, and regulators to provide guidance will also be needed to improve the outcomes of future pensioners.”