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Aegon calls on Govt to take “bold action” on pensions adequacy

by Muna Abdi
July 10, 2025
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Aegon is calling on the Government to take “bold action” in its pensions adequacy review by defining what constitutes an adequate retirement income, analysing how much individuals need to save, and building national consensus around these goals.

It urges the implementation of the 2017 auto-enrolment reforms, including extending enrolment to age 75 and introducing an auto-enrolment-style solution for the self-employed, all of which aim to tackle pension inequalities across the UK.

Aegon head of pensions Kate Smith says: “We hope the Chancellor will unveil details of the highly anticipated review of pension adequacy as part of her Mansion House speech next Tuesday. This is a pivotal opportunity to reach a consensus on what constitutes an adequate retirement income. The pension review is an opportunity to really move the dial on pensions adequacy for this and future generations of pension savers before it’s too late.  

“Adequacy isn’t the same ‘number’ for everyone – it should be linked to replacing a proportion of working age earnings, so will vary between groups of individuals, based on their earnings and their personal circumstances.  For lower earners, the state pension may provide an adequate retirement income, but for medium and higher earners, there’s a greater need to supplement this with private and workplace savings.

“We urge the pension adequacy review to carry out a detailed analysis of how much people need to save to achieve an adequate retirement income. This could also inform any future increases to auto-enrolment contributions.  

“Once individuals understand what might be an adequate retirement income for them, the industry can offer guidance, possibly through targeted support, around whether they need to contribute more to achieve this. 

“This is needed more than ever, with the Pensions Minister having ruled out any increase in minimum auto-enrolment contribution rates during this parliament. Remaining stuck at 8 per cent of a band of earnings for the foreseeable future

means auto-enrolment is unlikely to deliver adequate retirement income savings for all but the lowest earners. Yet most are in the dark about how much they need to save above the minimum. 

“Currently too many people are excluded from auto-enrolment as they are too young, too old, don’t earn enough or are self-employed. This means 45 per cent of working age people in the UK are not saving in a pension*, and many of the remaining 55 per cent are under-saving, So the review must tackle the growing risk of inadequate retirement incomes and pension inequality.  

“Implementing the 2017 reforms to auto-enrolment would go some way to reducing pension inequalities, including closing the pension gender gap, by helping more people to save more, earlier, and for longer. As people have longer working lives, we believe the upper age should rise to 75, rather than stopping at State Pension age.  

“A pension solution for the self-employed using the principles of auto-enrolment is desperately needed to nudge them into saving for later life. Without this, they risk falling way behind their employed counterparts in retirement.”    

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