The Pensions Review – led by the Institute for Fiscal Studies in partnership with abrdn Financial Fairness Trust – is a big, 2½-year, project that will comprehensively assess the consequences of current pension policy, the economic environment and individual behaviour for the future of living standards in retirement. It will also provide recommendations for reform to improve outcomes for future generations of pensioners across the UK.
The time is ripe for a comprehensive review of pensions policy.
The economic and policy environment is hugely different from when Lord Turner’s Pensions Commission reported in 2005. The UK has seen a global financial crisis, a COVID-19 pandemic and, most recently, the highest levels of inflation in almost 40 years. Interest rates (at least until mid 2022) have been at historically low levels, homeownership rates have fallen, and there has been a large rise in self-employment with the growth of the gig economy. All of these have consequences for how people are – or should be – saving for retirement.
Policy-wise, the key recommendations of the Pensions Commission were implemented: a more generous state pension, at least for now; a higher state pension age; and automatic enrolment of most employees into workplace pensions. And they were implemented with much success. But the Pensions Commission did not foresee the triple lock, the New State Pension, pension freedoms, and reductions to the generosity of the working-age benefit system, amongst other reforms.
Given the scale of these changes, there has been a dangerous lack of strategic oversight of the retirement saving system since the Pensions Commission disbanded. There is a clear risk that much better outcomes for pensioner incomes in recent years compared with earlier decades could be fuelling complacency that future generations of pensioners will achieve similarly good – or even better – outcomes. It is in this context that we launch our Review.
The Review is led by a team of three Directors at IFS: Paul Johnson, Carl Emmerson and Jonathan Cribb. We are guided by a highly qualified steering group: Alistair Darling (former Chancellor of the Exchequer), David Gauke (former Secretary of State for Work and Pensions) and Joanne Segars (former CEO of the Pensions and Lifetime Savings Association). This senior steering group will provide high-level strategic advice on the direction of the Review and on the merits and drawbacks of policy options that emerge from our work, and assist with disseminating our findings and recommendations to policymakers and the pensions industry.
The Review will centre on three key questions which we will explore in depth:
- Are people saving appropriately for retirement, in terms of both the amount and the form of saving, and if not, how can government policies help?
- How should the state support people from late working life into and through retirement?
- Do people require more assistance to use their wealth appropriately through retirement?
Throughout the project, a key cross-cutting theme will be the risks facing savers and pensioners regarding their standard of living in retirement. With the demise of private sector defined benefit arrangements, of state earnings-related pensions and of annuities, individuals are increasingly bearing all the risks associated with accumulating saving for retirement, and with decumulating their pension pots through retirement, in a way which was not true in the past.
We will undertake careful empirical analysis to understand recent economic trends and how people have responded to previous pension reforms. In addition, we will talk to policymakers, those in the pensions industry and those representing different groups of individuals to understand the key challenges and trade-offs. Alongside this project there will be a separate piece of public engagement work.
The Review was launched at a public event on April 2023. Preliminary findings will be published throughout the following two years, with the first main report in Autumn 2023. We will publish our key findings and recommendations for reform at launch events in London and Edinburgh in early Summer 2025.
If you have a professional or research interest in the subject of pensions or financial security in retirement and have insights to share, we would love to hear from you at: @email.
Paul has been the Director of the IFS since 2011. He is also currently visiting professor in the Department of Economics at University College London.
Carl, a Deputy Director, is an editor of the IFS Green Budget, is expert on the UK pension system and sits on the Social Security Advisory Committee.
Jonathan is an Associate Director and Head of Retirement, Savings and Ageing sector, focusing on pensions, savings and economic activity in later life
- Director, Morgan Stanley New York
- Honorary President, Chatham House
- Chair and Director, Crosswind Developments Limited
- Chair and Trustee, International Valuation Standards Council
- Governor, National Institute of Economic & Social Research
- Chair and Director, abrdn Financial Fairness Trust
- Head of Public Policy, Macfarlanes LLP
- Senior Adviser, Instinctif Partners
- Member of the Advisory Board of I Squared Capital
- Chair, LGPS Central Ltd
- Chair, Independent Governance Committee, Legal and General
- Chair, NOW Pensions Trustee Ltd (Trustee board of NOW: Pensions)
- Member, Pension Fund Governing Body, CERN
- Governor, Pensions Policy Institute
Analysis, comment and more
Why we're reviewing the UK pensions system
On Thursday 20th April, the review was launched at an event in Westminster. It featured speeches and presentations from Alistair Darling, Heidi Karjalainen, and Lord Adair Turner, which can be watched back below.
Slides from the event are available here.