UK’s pension crisis is already here, experts warn (Image: Getty)
A staggering 15 million people are not saving enough for retirement, according to a report by the Pensions Commission published today, a figure that could soar to 19 million without action – leaving large groups across the UK facing a severe cliff-edge when they retire. Low and middle earners, the self‑employed and women, are more likely to be under saving for their futures, the report found. Financial advisers said the findings were unsurprising and that “the pensions system hasn’t kept up with modern working lives”.
Set up by the Government in July 2025, the Commission aims to address a savings challenge that has been building for decades, examining why tomorrow’s retirees risk being worse off than today’s and making recommendations to reverse this. This follows the success of the 2002 to 2006 Commission which built a consensus for the roll-out of Automatic Enrolment into pension saving, resulting in 89% of eligible employees now saving into their pensions, up from 55% in 2012.
Low and middle earners are most at risk (Image: Getty)
Key takeaways from the report were that low and middle earners are most at risk, with around half saving only at minimum Automatic Enrolment levels with little else to fall back on, according to Newspage. Additionally, 45% of working-age adults – around 18 million people – are not saving into a pension at all, despite nearly half of them being in work. The report also found that, where employers are contributing about the statutory minimum, this is largely benefiting higher earners.
Worryingly, just 4% – one in 25 – of wholly self-employed workers are saving for retirement, and it’s even lower among younger self-employed people. The report revealed that around 3 in 10 private pension pots are accessed at the earliest possible opportunity with half of all pots taken out in full. Nearly half of these are spent on large expenses like a car, holiday or renovations.
A final report with recommendations will follow in early 2027, while the Government has ruled out any changes to Automatic Enrolment contributions this Parliament.
Pensions Commissioner, Baroness Jeannie Drake, said: “Over the past two decades since the Turner Commission there is no doubt pensions reform can be described as a success.
“Yet the second Pensions Commission is looking forward and seeing many people not saving enough and millions not saving at all. This demands a renewed national settlement on pensions.”
Minister for Pensions, Torsten Bell MP, added: “Britain has got back into the pension saving habit, but the job is only half done with tomorrow’s pensioners still on track to be poorer than today’s.
“The Pensions Commission sets out clearly the scale of the challenge: not enough people are saving for retirement, and many of those that are aren’t saving enough. The Commission warns that without action millions more people could be at risk of becoming reliant on state support in retirement.”
Advisers were largely unsurprised by the report’s findings and said that a pension crisis isn’t looming, rather we are already in it.
Eamonn Prendergast, Chartered Financial Adviser at Palantir Financial Planning, said: “The reality is we don’t have a pensions crisis coming, we’re already in one. Auto-enrolment has been a success, but for many people it’s simply not enough.
“Minimum contributions create the illusion of progress, but they won’t deliver the retirement people expect — particularly for low and middle earners, the self-employed and those with broken career paths.
“The challenge is behavioural as much as financial. People prioritise today over tomorrow, especially with rising living costs, and pensions feel distant and complex. Add in the fact that many access pots early and spend them, and the problem compounds.
“Fixing this will require a combination of higher contribution rates, bringing the self-employed into the system, and much better education and engagement. Without that, millions risk reaching retirement with a significant shortfall and a sharp drop in living standards.”
Scott Gallacher, Director at Rowley Turton, said he was unsurprised by the report’s findings.
He continued: “Despite the obvious success of Auto-Enrolment, I’m not particularly surprised by the conclusions of this report. Retirement can seem a very long way away, and people naturally tend to prioritise present-day financial pressures and spending over their future selves.
“Add in the cost of living crisis, and you can see why many people are effectively sleepwalking towards a retirement cliff edge, where they may face either a significant drop in income or having to work much longer than planned.
“If we are serious about improving retirement outcomes, Auto-Enrolment contribution levels will ultimately need to increase over time.”
Graham Nicoll, Financial Planner, Chartered FCSI at NCL Wealth Partners, was concerned: “The Pensions Commission report highlights a growing retirement crisis in the UK, particularly for low and middle earners, women and the self-employed.
“Too many people are either not saving at all or relying solely on minimum auto-enrolment contributions, which are unlikely to deliver the retirement lifestyle they expect.
“Business owners are also highly susceptible as many prioritise reinvesting back into the business over retirement planning. I am meeting a business owner this week who is in his early 60s with a pension worth just £70,000 despite years of strong earnings, because retirement planning was never prioritised.
“In doing so, he has also missed significant tax-efficient opportunities available through pension contributions and the chance to de-risk his business. The challenge is not just affordability, but education, engagement and long-term planning.”