Patrick Heath-Lay, CEO for People’s Pension
The Commission is right to recognise that the UK’s main pensions challenge is improving the adequacy and fairness of the pensions system in the context of an ageing society. This is fundamentally different to the challenge faced by the first Pensions Commission (in 2002). The challenge now is to improve retirement outcomes while ensuring the long-term sustainability of the pensions system as demographic change places increasing pressure on public finances.
Of these three priorities sustainability must be tackled first as it bridges pensions policy and public spending, creating the strongest foundation for reform. As the issue of pensions savings inadequacy gathers pace, the challenge will be to improve outcomes from the UK’s pensions system while managing the increasing fiscal pressures associated with both pensions and healthcare.
Our view is that preserving a universal flat-rate State Pension that retains its value over the long term should remain a cornerstone of the UK’s pensions system, complemented by higher levels of private saving to better insulate future retirees from the fiscal pressures that are likely to emerge over the coming decades. Alongside this, the Commission has an opportunity to provide greater clarity on what pension adequacy looks like and to set a clear long-term direction for how it can be achieved. That should include strengthening automatic enrolment over time, bringing younger and self-employed workers into pensions saving earlier and ensuring savers are better supported to convert their pension pots into sustainable retirement income. We also believe that ordinary savers should benefit from the same protections and standards regardless of whether the pension scheme is workplace or retail.
The second Pensions Commission has started an important conversation about how the UK responds to the issue of pensions savings inadequacy. We look forward to contributing to that debate as the Commission develops its final recommendations and helps shape a pensions system that delivers better, fairer and more sustainable outcomes for millions of hardworking people across the UK.
