07 July 2025

The Institute for Fiscal Studies (IFS), along with the Financial Fairness Trust, recently published their Pension Review 2025. Policy and research Officer, Mathew Akrigg was lucky enough to be invited along to the launch event. You can read the full report or the summary of recommendations on the IFS Website. Enjoy Mathew’s round up of the day.

First, let’s start with an overview of the recommendations given as part of the report. Heidi Karjalainen and Laurance O’Brien delivered a look at the key points. The report made recommendations in four areas, split down further where necessary.

  • State pension – the triple lock may result in the increase of state pension age to rein in spending
    • There should be a target level for state pension, expressed as a percentage of median earnings, linking state pension to the economic growth of the UK
    • Before and after the target is set the state pension should grow with at least inflation, this would be a “smoothed earnings link” as used in Australia
    • The state pension should not be means-tested
    • The state pension age should only be increased as longevity increases
  • Private pension savings
    • There is a strong case for employer contributions (of around 3%), regardless of employee contributions (non-contingent employer contributions)
    • The age range should be extended for automatic enrolment (AE) to 16–75-year-olds
    • Contributions should be paid form the first pound earned, but with thresholds for different default contributions – 3% up to £9,000 and 10% from £9,000 to £90,000
    • Implement default contribution rates which could be altered down as well as increased by employees
    • Small changes could be made to the self-assessment process to encourage the self employed to contribute to a private scheme
  • Means-tested benefits
    • The IFS identified that those within a couple of years of retirement are most at risk of falling below acceptable living standards and propose a means-tested benefit for those who need additional support
    • This would also improve the political and public support as and when the state pension age rises
  • Managing Wealth in retirement
    • There needs to be encouragement of different strategies for taking pension funds to enable good retirement outcomes such as “flex and Fix” which would encourage flexible drawdown in early retirement followed by fixing income with annuities alter in retirement.

There was discussion around the topics, on objection which I agree with is the necessity of implementing an additional threshold for automatic enrolment contributions, this would potentially lead to more confusion and non-compliance. However, rates that could be reduced by employees without opting out is something our members have asked for and supported for some time.

Following this, the minister for pensions, Torsten Bell, gave a short talk about the state of pension within the UK. As part of this there were three standout comments as part of the speech and follow up questions:

  1. There are over 13 million small pots of less than £1,000 in value. Highlighting the need for small pot consolidation
  2. One of the fastest growing sectors is solo self-employment, potentially indicating a rise in gig economy workers and single worker status reforms being needed/wanted
  3. There will be no rise to the AE rates this parliament

The final may provide some small comfort for employers who are feeling the pinch of recent employment cost changes. However this does not stop future changes being legislated for this parliament to be implemented outside of the current parliament.

A final panel session covered off the report and discussed the main challenges and strong points with the report. If I had to distil the conversations down to some main points they would be:

  • The triple lock is still a big political point, but the “smoothed earnings link” seems like a sensible solution that would maintain the triple lock for the time being to protect the vulnerable in retirement
  • Long term strategy and transparency is required from government; we need a plan to know how to adapt and properly implement future changes
  • This is a wider conversation than just thresholds, simplification of requirements, cost of living issues and wider government spending all play a part that make the situation much more complex than small number tweaks.

The sessions were very insightful and informative and gave me a great appreciation of the pension landscape in the UK today. This is the sort of event the policy team are always excited to get involved in, understanding the ins and outs of the future of legislation. We do this to represent the profession and our members whenever we can and ensure that you are aware of what the future will look like.


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