On 21 July 2025, the UK Government announced it was reviving the 2002 – 2006 Pensions Commission to review pensions adequacy, looking at why tomorrow's pensioners are on track to be poorer than today's and make recommendations for change.

According to the announcement, 40% of people are under saving for retirement and if nothing changes then retirees in 2050 are on course to receive £800 per year or 8% less private pension income than those retiring today.

The Government points to several groups which are particularly at risk, including low earners and those who are self-employed, and to a 48% gender pensions gap in private pension wealth between men and women.

The new Pensions Commission is being launched to explore these problems and recommend solutions, with its final report due in 2027.

What did the first Pensions Commission achieve?

The first Pensions Commission was established in 2002. In its first report in October 2004, it noted that over the previous 10 years, participation in defined benefit pension schemes had collapsed to a greater degree than was expected. It also concluded that, while some employers had replaced those defined benefit pension schemes with defined contribution schemes, most employers had chosen no replacement scheme at all.

The Commission's final report was published in November 2005 and recommended the now well-established auto-enrolment system. This system has been a success with the Government highlighting that as of 2023, 88% of the eligible population of employees are now participating in workplace pensions saving, up from 55% in 2012.

What's next for pension reform?

While the Government acknowledges the auto-enrolment regime's success, it notes that there is further work to be done.

Not all workers are eligible for auto-enrolment, and not all of those who are eligible are enrolled. For example, individual's earning less than £10,000 are not eligible for auto-enrolment, so pension participation for this earnings group is much lower. As a result, the Government notes that only 55% of the working age population are saving into a pension.

Other issues were highlighted such as inequality amongst pensioners, noting that the ratio for pensioners who are single has grown over the past decade due to higher divorce rates and increased longevity. Due to the "single premium" which can apply to costs such as energy or vehicle bills, single pensioners are less likely to have an adequate retirement income.

Another key challenge the Commission will address is the shift in pension risk.  Pension Freedoms and the move from defined benefit pension schemes to defined contribution pension schemes has shifted risk in pensions from employers to individual savers. A defined contribution scheme will leave a pensioner with a savings pot, rather than a guaranteed income for life. This leaves important decisions for a defined contribution saver and how they manage their pot to support them throughout retirement - often without financial advice or guidance.  This issue is already a key focus for the Government with the Pension Schemes Bill providing that for schemes that choose to offer default retirement options, regulations will require a default decumulation option which will provide members with access to their pension benefits without having to make a choice. A call for evidence and consultation on decumulation is expected in 2026.

The Commission has stated its aim will be to "finish the job" of the first Pensions Commission and create a "strong, fair and sustainable pensions landscape that is fit to last into the middle of the 21st century and beyond".

Review of State Pension age

Alongside this work, the Government will also review the State Pension age as it is required every 6 years by the Pensions Act 2014. Two reports are being prepared – one by the Government Actuary's Department and the other being a separate independent report which the Department for Work and Pensions has appointed Dr Suzy Morrissey to undertake.

The independent report will consider:

  • The merits of linking State Pension age to life expectancy, including considering fairness between generations;
  • The role of the State Pension age in managing the long-term sustainability of the State Pension; and
  • International experience of automatic adjustment mechanisms for making decisions about State Pension age.

Specifically, the terms of reference for the independent report note that it will assume that current policies regarding entitlement and value of State Pension will remain unchanged over the long term.

Looking ahead: expectations for the Pensions Commission relaunch

The relaunching of the Pensions Commission is welcome news given the well-known challenges faced by today's work force in respect of retirement, saving and planning. The UK economy and workforce are in a very different place today compared to when the former Pensions Commission published its final report in 2005, so close scrutiny of the issues affecting tomorrow's pensioners is good news.

We await the findings of the new Pensions Commission with interest and hope that any proposed solutions will mirror the success of the auto-enrolment regime.

If you have any queries on this article, or would like further information on the Pensions Commission relaunch, please get in touch with Joanne Tibbott, Stephanie Nicholls-Hinks or Kim Muddimer.