Five Steps to Better Pensions: Final Report

Five steps to better pensions: Final Report

This report builds on our work looking at improving pensions adequacy, including our 2022 report and consultation, to restate the PLSA’s proposals for reform. 

While automatic enrolment has been successful in getting millions more saving for retirement, too many are excluded, and many of those in auto enrolment are not saving enough. Without policy intervention, most people in the UK will retire with inadequate pension income. The Government has begun taking action to address this shortfall by introducing some reforms to the automatic enrolment regime, but more action is needed.  

We propose Five Steps to Better Pensions:  

  1. Set new goals for the UK pensions framework: adequate, affordable and fair.  
  2. The State Pension should protect everyone from poverty and its value should be maintained by keeping the Triple Lock.  
  3. More people should be saving into a workplace pension and at higher contribution levels. Over the next decade contributions should rise gradually from 8% to 12%. While employees should only be required to put in 1% extra, we believe employers should put in 3% extra, with the result that by the early 2030s each will be paying 6%, totalling 12%. 
  4. Additional help should be given to under-pensioned groups such as women, the self-employed, gig economy workers and others. Some of these will require changes to automatic enrolment or other interventions.
  5. The pensions industry and employers should take action to help people engage with pensions, receive higher contributions, or get better pension outcomes. This includes maintaining initiatives such as the Retirement Living Standards and the Pay Your Pension Some Attention campaign.  

If all our proposals are implemented, and the State Pension Triple Lock maintained, people on all income levels will have an improved income in retirement. If someone was to work for a full working life without career breaks, the projected retirement income for a median earner would increase for men from £17,672 to £20,609 and for women from £17,177 to £19,825. 

Download the report
Read the modelling behind the report