Britain’s state pension age is set to be reviewed, the Government has announced.
Work and Pensions Secretary, Liz Kendall, said workers today “aren't saving enough for their retirement” as she revealed Labour will be reviving the pensions commission on Monday.
"Put simply, unless we act, tomorrow's pensioners will be poorer than todays, because people who are saving aren't saving enough for their retirement,” Ms Kendall said during a speech to launch the move.
"And crucially, because almost half of the working age population isn't saving anything for their retirement at all.”
The commission is expected to provide recommendations for how to boost retirement income in 2027.
Ms Kendall also announced the next statutory government review into the pension age.
The Government assesses the retirement age, currently 66 and increasing to 67 in 2026, every six years but appears to be starting this one early as the last one was done in 2023.
In the major speech, the cabinet minister warned that the cost of the triple lock guarantee on the state pension is £31billion-a-year.
The triple lock, introduced by David Cameron’s government in 2010, means that the state pension either rises by 2.5% or inflation whichever is higher to keep up with the cost of living.
Ms Kendall added that she was "under no illusions" about how difficult it would be to map out plans for pensions for the coming decades amid cost-of-living pressures.
She conceded that "many workers are more concerned about putting food on the table and keeping a roof over their heads than saving for a retirement that seems a long, long way away, and many businesses face huge challenges in keeping profitable and flexible in an increasingly uncertain world".
Rachel Vahey, head of public policy at AJ Bell, said the Government's “own analysis points to a dire need for intervention”.
She said: “Retirees in 2050 are on course for 8% less private pension income than those retiring today.
"While automatic enrolment has created 11 million new pension savers, many are saving the bare minimum.
“The demise of private sector defined benefit pensions and a levelling down of contribution rates by some private pension schemes have meant that, although there are more pension savers in the UK, they are not all saving enough.
"The solution could be higher contribution rates. But new plans for demanding employers stick their hands in their pockets once more, so soon after the national insurance hike, will be deeply unpopular, even if Labour has ruled out increasing pension contributions for employers in this Parliament.
"Meanwhile, many low earners would also struggle to pay higher contributions out of a low disposable income hit by inflation. It's likely the revived Pension Commission will have to think smarter, and that a more nuanced approach is needed.”
