PensionBee Urges Pensions Commission to Deliver Bold Reforms to Secure Better Retirements for Millions of UK Savers

Millions risk being condemned to retirement poverty unless the UK’s pensions system is overhauled, PensionBee has warned, as it calls on the Pensions Commission to deliver bold reforms to tackle deep-rooted structural inequalities.

In a letter to the Commission, the leading online pension provider highlights how women, unpaid carers, the self-employed and lower-paid workers are being locked out of the progress achieved through Auto-Enrolment, while many others are being held back by a pensions market that is too complex and sluggish to navigate.

PensionBee warns that lengthy transfer delays, lost pension pots and a lack of consumer-friendly processes are preventing people from taking control of their savings, compounding the inequalities faced by those on lower incomes or with less stable working patterns. It is calling for a fairer, more efficient system that works for everyone – reflective of the modern workforce and empowering consumers to engage with and optimise their pensions.

PensionBee’s letter warns that:

• The self-employed pension gap is widening: Over 80% of self-employed workers are not saving into a pension, according to the DWP. PensionBee’s own research shows 60% of self-employed workers without a pension cite affordability as their main obstacle, while nearly 70% of gig workers support universal pension inclusion.
• Unpaid carers face a retirement penalty: For every year out of paid work to care for children, parents or elderly relatives, carers lose around £5,000 from their pension pot. Those who take several years out of paid work to provide care could retire with around £30,000 less in their pension pot than peers who remain in the workforce.
• The gender pension gap remains stark: Women contribute 27% less into their pensions per quarter than men, and by their 50s have pension pots half the size of their male counterparts. Only 24% of women feel a great deal of control over their pensions, compared to 37% of men.

In a bid to address these issues holding savers back, PensionBee is urging the Pensions Commission to deliver a package of four practical and immediate reforms.

1. Increase default Auto-Enrolment rates, as it is clear that current default minimum contribution rates are insufficient and were never intended to be the longer term goal. Today’s employers are faced with high costs of employment and consumers are faced with an ongoing cost of living crisis and a high tax burden. This makes it difficult and painful to implement in the immediate term, however a clear path towards higher default contributions needs to be set.
2. Expand the Auto-Enrolment net to those currently excluded, such as younger workers and lower paid workers, as well as those juggling multiple part-time jobs, who are currently shut out from the system. This tends to disproportionately affect women, those with caring responsibilities and ethnic minorities. Broadening eligibility would directly address the systemic barriers impacting those such as women and carers, as identified in our research.
3. Give self-employed workers a simple way to opt in and stay in by introducing automatic pension deductions through the Self-Assessment tax system. Provide tailored support to those in insecure work, including gig economy workers, to make saving both accessible and sustainable.
4. Make pension transfers simple and efficient, so that people are empowered to make the most of the savings they have and optimise them for the future. Legislate for a reasonable timeframe to drive much needed change. Look to reform and tighten up the pensions scam regulations, which enable too many legitimate transfers to be blocked or obstructed. Make pension providers and administrators accountable for poor performance when transferring pensions.

Lisa Picardo, Chief Business officer UK at PensionBee, said: “Tomorrow’s retirees are on track to be poorer than today’s unless immediate action is taken to break down barriers to improve retirement saving and engagement.

The UK’s pensions system is simply not working for millions of people – and it’s those who need support the most who are paying the price. Women, carers and the self-employed have been consistently overlooked, and unless we act now, they face being condemned to a poorer retirement.

“This is not inevitable. We know what the problems are, and we know how to fix them. The Commission has a once-in-a-generation chance to reshape the system so that it’s fit for purpose and works for everyone – by expanding Auto-Enrolment, giving the self-employed a simple way to save, and finally fixing the broken pension transfer system so people can take control of their money, better engage with their savings and improve their own outcomes.

“A fair and inclusive pensions system isn’t just good policy – it’s a moral necessity. We can’t afford to wait any longer.”