Sleeping into retirement poverty? Can The Pensions Commission close the gap

This month, I’d like to turn your attention back to pension adequacy. It has re-emerged as one of the most pressing long-term policy challenges in the UK. Automatic enrolment transformed participation in workplace pensions, bringing millions into saving for retirement. But participation alone is not enough. The question now is whether today’s system will deliver adequate incomes tomorrow.
 
Recent research paints a concerning picture. Studies suggest around one in five workers risks retirement poverty if current contribution patterns persist. Analysis from the Institute for Fiscal Studies shows many private-sector employees are not on track to achieve target income replacement rates. Large numbers already reach pension age with modest defined contribution pots, often equating to only a few thousand pounds a year in private income.
 
Structural pressures are also mounting. Minimum contributions under automatic enrolment stand at 8% of qualifying earnings, a level many experts argue is insufficient to generate comfortable outcomes, particularly for lower earners or those with interrupted careers. Meanwhile, defined benefit schemes have largely disappeared from the private sector, longevity continues to increase, and the State Pension Age is rising. The shift of risk from employer to individual is now largely complete.
 
Yet before policymakers can fix adequacy, they must define it.

Is adequacy about preventing poverty? Replacing a set percentage of pre-retirement income? Achieving a recognised minimum living standard? Or ensuring resilience against longevity and care costs? Without a shared and measurable definition, reform risks becoming incremental rather than strategic.
 
This is the context in which the government has revived the Pensions Commission; the independent body whose earlier work led to automatic enrolment. Its renewed mandate is to assess whether the current system will deliver sufficient retirement incomes for future generations and to recommend reforms where necessary.
 
It’s not an easy task. Raising contribution rates or expanding enrolment carries economic and political trade-offs, especially amid ongoing cost-of-living pressures. But the greater risk lies in delay. Without action, future pensioners could be poorer than today’s, reversing decades of progress in reducing old-age poverty.
 
The call to action is clear.

Policymakers must be prepared to take long-term decisions rather than seeking short-term political comfort. Employers should engage constructively in discussions about contribution levels and scheme design. The industry must improve communication and transparency to help savers understand what “enough” looks like. And individuals, where possible, should review their own contribution levels and retirement expectations (I know that I have — have you?).
 
Pension adequacy is not a distant technical debate. It is a question about the future living standards of millions of retirees. The revived Pensions Commission now has both the opportunity and the responsibility to set a clear, credible roadmap. The time to act is before the adequacy gap becomes a retirement crisis.