Topic: Retirement saving

Employers say workplace pensions must evolve for changing financial realities facing younger workers

  • Almost half (45%) say immediate financial pressures are preventing younger workers from prioritising long-term saving
  • More than a third (37%) believe younger employees increasingly see a comfortable retirement as unrealistic, while 36% say they are less engaged with pensions than previous generations
  • More than a third (36%) say the pensions industry has not adapted quickly enough to changing workforce expectations
  • A third (33%) believe better financial education from a younger age could have the greatest impact on future retirement outcomes

Employers believe younger workers are facing significantly different retirement challenges to previous generations, as immediate financial pressures and changing career patterns make long-term saving harder, according to new research¹ from People’s Pension².

Almost half (45%) of SME employers say younger workers under 25 are unable to prioritise long-term saving because of immediate financial pressures. More than a third (37%) believe younger employees increasingly see a comfortable retirement as unrealistic, while 36% say they are less engaged with pensions than previous generations.

Employers also point to changes in the way younger people enter and move through the workforce. Almost a third (32%) say delayed career progression and lower earnings are reducing opportunities to build retirement savings early, while 27% believe more fragmented and less secure careers are making long-term pension saving harder. Just 4% say younger workers do not face significantly different retirement challenges.

The findings come as employers question whether the pensions industry is keeping pace with those changes. More than a third (36%) say the industry has not adapted quickly enough to changing workforce expectations, while 28% believe adapting workplace pensions to better suit fragmented or less traditional careers will help define the next major phase of the system.

Employers also see opportunities to improve future retirement outcomes. A third (33%) believe better financial education from a younger age could have the greatest impact, while 29% point to stronger government incentives to save. More than a quarter (26%) say making retirement options simpler to navigate could transform outcomes for future workplace pension savers.

These findings come during Talk Money Week (2-6 November), which focuses on the theme ‘It All Counts’, encouraging people to recognise the value of small, manageable steps towards improving their financial wellbeing. Against a backdrop of financial pressures making long-term saving difficult for younger workers, the findings highlight the importance of helping people understand and engage with their pensions from an early age, even when increasing contributions may not be affordable.

Stuart Reid, Distribution Director at People’s Partnership, said:

“Younger people are entering the workforce in a very different financial environment to previous generations. Many are balancing immediate pressures with the need to save for the long term, while the traditional idea of a steady career and a predictable path towards retirement is becoming less relevant for some.

“We can’t expect younger workers to simply fit into a workplace pension system built around very different career paths. The system must evolve alongside them, making it easier for people to understand the value of saving and stay connected to their financial world as their jobs, earnings and circumstances change.

“Talk Money Week is a reminder that even small steps and conversations about money can make a difference. For younger workers who may not be in a position to save more, simply understanding what they and their employer are contributing, or taking the time to review their pension savings, can be a valuable starting point. Employers and providers have an important role to play in making these conversations easier and giving people the confidence and support to make informed decisions about their financial future.”

ENDS

People’s Pension comments on the Government’s Guided Retirement Policy Consultation

Speaking on today’s publication of the Guided Retirement Policy Consultation, Kirsty Ross, Product and Proposition Director for People’s Pension1, said:

“Delivering guided retirement successfully ought to strengthen trust in pensions by giving hardworking savers confidence that, when they retire, their workplace pension will provide a reliable and accessible income for life alongside the State Pension, without requiring them to navigate complex financial decisions at retirement that they are ill-prepared for.

“This significant reform, much like our decade-long New Choices, Big Decisions research, recognises that, while inertia has successfully supported pension saving through automatic enrolment, it’s unrealistic to expect millions of individuals to suddenly become retirement income experts when they reach retirement.

“Guided retirement should build on the success of automatic enrolment by carrying the benefits of good scheme design into decumulation. Clear pathways can help members turn pension savings into sustainable retirement incomes, while allowing those with different needs or preferences to make alternative choices that better suit their circumstances.

“Retirement defaults should form a scheme’s core retirement proposition, providing a trusted pathway to strong outcomes for members while maintaining straightforward routes for those who wish to do something different.

“At the same time, retirement default journeys should include clear consideration of members whose circumstances may warrant a more tailored approach, including those with particular health conditions, dependants, or wider financial needs.

“The consultation also provides an opportunity to support innovation in retirement income provision. Collective approaches, including Retirement Collective Pension Schemes (RCPS) schemes, have the potential to help deliver more sustainable retirement incomes by pooling risks and focusing on member outcomes throughout retirement.”

ENDS

People’s Pension joins TISA to strengthen support for vulnerable customers

People’s Pension1 has joined The Investing and Saving Alliance2 (TISA), as part of its commitment to delivering fairer outcomes for all members, including those in vulnerable circumstances. 

The move will also see the UK’s largest commercial master trust join TISA’s Vulnerable Customers Working Group, which brings together regulators, vulnerability experts and industry peers to discuss emerging issues and approaches to supporting vulnerable customers throughout their retirement journey. 

TISA represents more than 260 organisations across the savings, investments, pensions and wealth sectors. The UK not-for-profit membership organisation works with industry, government and regulators to develop best practise and shape the future of the UK financial services.  

Research from the Financial Conduct Authority (FCA) 3 indicates that around half of UK adults display one or more characteristics of vulnerability at any given time, with the number increasing during periods of financial pressure. The scheme, which is provided by the not-for-profit People’s Partnership, recognises the importance of bringing simplicity and fairness to pension savings, and remains committed to continuously improving the tools and guidance available for more than 7 million members, particularly for those less able to engage with retirement planning.    

Through its membership of TISA, People’s Pension will be able to contribute to industry discussion, help shape guidance and remain at the forefront of evolving industry standards and regulatory expectations around vulnerability.  

Kirsty Ross, Product and Proposition Director for People’s Pension said:  

“At People’s Pension, we truly believe that delivering the best possible member outcomes means recognising that each member has specific needs, with some needing more support than others. Vulnerability can affect anyone, whether through financial pressures, health challenges or bereavement. 

“Joining TISA provides an important opportunity to learn from other industry experts and help shape the future of support for vulnerable customers. Through discussion and collaboration, we can continue improving our approach and ensure that even more people receive the support they need to make informed decisions about their retirement.” 

Mark Westwell, Chair of The Investing and Saving Alliance (TISA) said: 

“We are delighted to welcome People’s Pension as our newest TISA member. With extensive experience supporting millions of pension savers and a shared commitment to improving outcomes for consumers, they bring valuable insight that will strengthen the important work of our Vulnerable Customers Working Group. 

“Industry collaboration is at the heart of TISA’s work, and we look forward to working with People’s Pension to continue building our collective knowledge, champion good practice and drive meaningful change in how vulnerable customers are supported across the entire financial services sector.” 

ENDS 

Government’s triple lock shake-up strengthens calls for vital automatic enrolment reforms proposed by leading economist

  • Independent report commissioned on behalf of People’s Pension shows how the proposed reform of the State Pension triple lock changes the context for the final report of the second Pensions Commission.
  • Triple lock reform will stabilise the level of the state pension at around 30% of median earnings, halting its growth in value. Private saving will need to rise to enable savers to hit the same level of overall retirement income.
  • Middle earners are most at risk of under-saving, while lower earners face more immediate financial pressures.
  • Reform of the triple lock reduces but does not eliminate the risk of some lower earners saving too much should minimum automatic enrolment contributions rise significantly. 
  • The report proposes higher default pension contributions, alongside measures to support lower earners and an increase in the upper earnings threshold for automatic enrolment to around £65,000.

A new independent report1 commissioned on behalf of People’s Pension2 shows how the proposed reform of the triple lock changes the context for the forthcoming final report of the second Pensions Commission3 and strengthens the case for higher minimum pension contributions. Under the changes due to come into effect from 2030, the State Pension would broadly track average earnings over time.

The study, authored by leading economist Carl Emmerson, partner at London Economics, argues that the State Pension and workplace saving need to be considered together when assessing future retirement adequacy, because decisions about the future level and uprating of the State Pension will affect how much people need to save privately.

While triple lock reform would place future public finances on a more stable footing, the recently announced proposed change would make it harder for people to hit common pension adequacy benchmarks over the long term, as the State Pension will replace a lower proportion of pre-retirement earnings

For a £40,000 earner retiring at 63 and saving at the legal minimum level, Emmerson’s modelling suggests retirement income would replace around 62% of their previous take-home pay if the State Pension triple lock is maintained, falling to around 55% under a reformed triple lock, which would see the State Pension rise in line with earnings over time. Both are below a target of around 74%4 of take-home pay for such a median earner, sufficient to maintain living standards in retirement.

Automatic enrolment has been one of the UK’s public policy successes, but the report finds that middle earners5 are now the group where evidence of under-saving is strongest. Official estimates suggest around 40-50% of people in middle-earning groups are not on track to meet their target replacement rates under triple lock uprating6 and this figure will be higher under the reformed triple lock.

The findings reinforce the need for the second Pensions Commission to set out a target measure of retirement adequacy and propose the level of automatic enrolment contributions and threshold changes needed to achieve it.

However, policymakers need to think carefully about how to minimise negative impacts of higher universal contributions on lower earners, not all of whom can afford to save more. Under the reformed triple lock, the number at risk of saving more than they need for retirement would be smaller, but the risk would remain. The trade-off involved in raising pension contributions across a large and diverse population and how to mitigate the risk of people being nudged to save more than they can afford must be considered.

The report recommends:

  • Increasing default minimum automatic enrolment pension contributions.
  • Retaining a lower qualifying earnings7 threshold to protect lower earners from higher default contributions.
  • Provide employees with the option to opt down to the current minimum contribution rates.
  • Increasing the upper earnings8 threshold for automatic enrolment – the salary cap for minimum contributions – to around £65,000 and indexing it to earnings.
  • Modernising National Insurance credits to support part-time and part-year workers better, alongside considering mandating employer pension contributions from the first pound earned, including for employees who opt out of contributing themselves.

Carl Emmerson, Partner at London Economics and former Deputy Director of the Institute for Fiscal Studies, said:

“Automatic enrolment transformed workplace pension saving and remains one of the UK’s most successful public policy reforms of the last twenty years. A challenge now is ensuring those employees brought into a workplace pension are contributing enough for their retirement.

“We cannot answer that challenge by looking at workplace saving alone. The State Pension provides the foundation for retirement income, and its future level and uprating will directly affect how much people need to save privately.

“Our new research shows that different groups face very different retirement challenges. Middle earners are where the evidence of under-saving is strongest, while policymakers need to be cautious about measures that could put further pressure on lower-income households today.”

Patrick Heath-Lay, Chief Executive Officer for People’s Pension, said:

“The report makes a clear case for evolving the UK pensions system into a better integrated system where the state and workplace pensions combine to replace a target level of income in retirement. But if the state pension is to be held steady at 30% of median earnings then the case for increased private saving is strengthened.

“Policymakers should be cautious. There is a trade-off between the simplicity that has brought more than 11 million people into retirement saving via automatic enrolment and the need to protect lower earners from the impacts of higher contributions. Careful thought needs to be given to how to reduce risks for the lowest earners if a flat increase in contributions emerges as the Commission’s best option.”

Beyond automatic enrolment, the report argues that some of the biggest threats to future retirement adequacy sit outside the pensions system itself, including weak wage growth, rising housing costs, early labour-market exit and persistent labour-market inequalities. It concludes that lasting improvements in retirement outcomes will also depend on wider reforms to housing, labour markets and the economy.

Carl Emmerson and Patrick Heath-Lay will discuss the report’s findings at the Pensions UK Annual Conference on Tuesday 13 October.

ENDS

People’s Pension gives back more than £150 million to its members through its savings reward

People’s Pension1, the UK’s leading workplace pension scheme, has today announced that more than £150 million has been given back to its members through its innovative savings reward2.

The savings reward, which was launched in 2020, is central to People’s Pension’s commitment to delivering better retirement outcomes for its seven million members; the more members save, the more People’s Pension gives back, with more than £4 million3 currently being returned to its members every month. The savings reward could be worth as much as £17,2844 to an individual with average salary of £35,000.

This latest milestone follows a number of enhancements to People’s Pension’s member offering including the launch of an annuity guidance service5, personalised video support6 to new members when they are onboarded or existing savers via video statement, as well the creation of its regular income planning tool7 to support its members planning and setting up an income plan at retirement. As an organisation without shareholders, People’s Pension is committed to bringing fairness to pensions by delivering value directly back to its savers.

Looking after one fifth of the UK workforce, People’s Pension is one of the only UK workplace schemes to offer its members a single pension pot, regardless of how many times they have been enrolled by different employers. Alongside this, the scheme applies a best price guarantee across its annual management charge (AMC), helping its members keep more of their money invested.

David Meliveo, Chief Commercial Officer for People’s Pension, said: “Reaching the £150 million milestone is a really significant moment for us and underlines our commitment to fairness. The savings reward is a prime example of how the more we grow, the more we will be able to give back to our savers. After all, this is what we’re all about – a pension provider with a purpose, that puts its members first, and this initiative is just one way we help our members build financial foundations for life.”

Mark Condron, Chair of The People’s Pension, said: “As the UK’s largest commercial master trust and one of the nation’s fastest growing asset owners, this milestone is a powerful demonstration of how we’re able to leverage our increased scale to innovate and deliver better long-term value for our seven million members. As People’s Pension continues its rapid growth, the more we will be able to give back to our members through initiatives like savings reward in the years ahead.”

ENDS

Two thirds of SMEs say they are unable to meet growing responsibility for employee retirement outcomes

  • More than half (51%) of UK SMEs believe retirement outcomes are primarily the responsibility of employers, but the vast majority (68%) believe they lack the expertise and resources to support their workers
  • Seven in ten (70%) SME employers say businesses are increasingly expected to help employees achieve better retirement outcomes
  • More than two-thirds (67%) believe employers are expected to support retirement confidence and decision-making, as well as broader financial wellbeing

SME employers feel increasingly responsible for helping employees achieve better retirement outcomes, but the majority say they don’t have the support available to help them meet those expectations, according to new research¹ from People’s Pension².

While more than half (51%) of SMEs now believe retirement outcomes are primarily the responsibility of employers, many feel those expectations are growing faster than the support available to them. More than two thirds (68%) believe they lack the expertise or resources to offer this wider financial wellbeing support.

Seven in ten (70%) employers say there is a growing expectation on businesses to help employees achieve better retirement outcomes, while 67% believe employers are increasingly expected to support retirement confidence and decision-making. A similar proportion (67%) say employers are also being drawn into broader financial wellbeing responsibilities beyond pensions.

The findings suggest employers increasingly see supporting employees’ long-term financial wellbeing as part of their role, while underlining the importance of providers and advisers helping them meet these wider expectations.

The research comes as the Pension Schemes Act 2026 introduces the next phase of workplace pension reform, including a new Value for Money framework and requirements for schemes to offer clear default retirement income options. As the industry places greater emphasis on the outcomes members achieve, effective collaboration between employers, providers and advisers will become increasingly important.

Stuart Reid, Distribution Director for People’s Pension, said:

“It’s encouraging that so many employers recognise the role they can play in helping their employees retire well and with confidence. But many also feel they’re being asked to do more without necessarily having the expertise or resources to do it, and that’s where providers need to step up – with better products, simpler member journeys, and support that looks beyond just the financial side of retirement.

“The numbers are obviously important, and good tools and guidance can make it much easier for people to understand what they can afford. But there’s much more to a good retirement than working out the maths. People need to think about what they’re actually going to do with their time, what will give them a sense of purpose, and what responsibilities they might still have to others. Employers can help people start thinking about those questions, but they can’t do it all – providers and other specialists have an important role to play too.”

Pensions industry short on time to deliver Value for Money reforms

The provider of People’s Pension has called for Government, regulators and the pensions industry to work together at pace to deliver the new Value for Money (VfM) framework, warning that the sector is short on time to implement reforms which will deliver better outcomes for millions of pension savers.

Responding to the latest consultation on the framework, People’s Partnership, which provides the People’s Pension to 7.2 million people, said getting VfM right will be critical not only to improving outcomes for savers, but also to supporting the Government’s ambitions to unlock greater productive investment from pension schemes. If schemes are to invest more for the long term and play a greater role in supporting UK economic growth, they need clarity over how investment performance and value will be assessed under the new regime.

The organisation, which operates without shareholders, welcomed the Government’s ambition to introduce a consistent way of assessing the value delivered by workplace pensions, but said significant work remains to give schemes the regulatory and technical certainty they need. Without that clarity, schemes will find it harder both to prepare for implementation and to make long-term investment decisions with confidence.

The provider said the revised timetable is achievable, but only if Government and regulators work closely with industry over the coming months. It is calling for regulations and supporting technical requirements to be developed in parallel, alongside a clear roadmap setting out what schemes will need to do and by when. Providing that certainty quickly will be essential if the Government is to deliver both a workable VfM framework and its wider ambitions for pension capital to support productive investment and UK growth.

Patrick Heath-Lay CBE, CEO of People’s Partnership, said:

“The Value for Money framework will bring the change the pensions industry needs and will support delivery of better outcomes for millions of savers – but we don’t have long to ensure it does. There is a lot of work to do to give schemes the clarity they need to build, test, and implement the changes in time. The only viable approach is for government, regulators, and industry to work in genuine partnership and at pace.

“This is vital not only to ensure the VfM framework can get off the ground as intended, but also to realise the Government’s plans around productive investment. If we want pension schemes to play a greater role in driving the UK economy through long-term investment – and we do – they need the confidence to make those investment decisions with a clear understanding of how they will be assessed. Getting that clarity in place quickly will be crucial.”

People’s Pension warns millions of savers could miss out on free targeted pension support

Millions of hardworking workplace pension savers risk missing out on free targeted support with important retirement decisions because of how their pension is regulated, People’s Pension has warned, as it calls on Government to address the gap between contract and trust-based schemes.

People’s Pension has backed the introduction of targeted support as a landmark Government reform that has the potential to close the advice gap between information and regulated financial advice, giving ordinary savers better access to the sort of help they need to make complex pension decisions.

However, the new framework only applies to FCA-regulated contract-based pension providers. Trust-based workplace schemes, including master trusts regulated by The Pensions Regulator (TPR), sit outside the FCA framework, meaning their members cannot access targeted support through their scheme.

People’s Pension warns this could result in people facing very different levels of help when making the same retirement decisions, based not on their individual needs but on the type of pension scheme their employer selected for them.

Targeted support could make a significant difference at key points throughout a saver’s pension journey. This could include giving someone a stronger steer if they are under-saving, helping those approaching retirement understand how they might generate a retirement income, or identifying when someone may be withdrawing at a rate that risks their pension running out.

While trustees may currently be able to provide forms of personalised support akin to targeted support, People’s Pension says the absence of a clear legal and regulatory framework creates additional complexity and risk for trust-based schemes. In practice, this creates a strong compliance and cultural barrier to trustees offering support that could be perceived as advice.

People’s Pension is calling on Government to introduce a TPR-supervised targeted support framework for qualifying occupational pension schemes, allowing trust-based pension savers to access equivalent support and protections to those available through FCA-regulated schemes, while recognising trustees’ different legal and fiduciary responsibilities.

David Meliveo, Chief Commercial Officer for People’s Pension, said:

“Targeted support is a fantastic opportunity to help millions of people with their pensions who are never likely to have a traditional financial adviser.

“We cannot end up with a two-tier system where the vast majority workplace pension savers miss out on targeted support simply because their employer chose a Master Trust rather than a Group Personal Pension. People do not think about whether their pension is FCA or TPR regulated when deciding whether they are saving enough, how to generate a retirement income or how to make their money last through their later life. They just want straightforward help to make a better decision.

“We want to be able to offer People’s Pension members the same kind of targeted support that contract-based providers are now developing. Government has an opportunity to create a level playing field that allows trust-based schemes to do that safely, so the type of pension someone’s employer chose does not dictate the quality of help they get.”

ENDS

Retirement support emerging as a key differentiator in workplace pensions, advisers say

  • Nearly two-thirds (64%) of advisers believe workplace pension providers still look too similar
  • Almost half (48%) say retirement support is becoming the key differentiator between providers
  • Almost six in 10 (58%) believe member outcomes and support now matter more than cost alone
  • More than a third (35%) expect retirement income solutions to become one of the biggest differentiators over the next five years
  • The findings suggest providers have an opportunity to stand out by supporting members throughout their savings journey and into retirement

Workplace pension providers can no longer rely on cost alone to stand out, as employers and advisers increasingly place greater value on retirement support when assessing providers, according to new research¹ from People’s Pension².

Nearly two thirds (64%) of independent financial advisers believe workplace pension providers still look too similar, suggesting there remains considerable scope for providers to differentiate themselves. Almost half (48%) believe retirement support is becoming the key differentiator between providers, while more than a third (35%) expect retirement income solutions to be among the biggest areas of differentiation over the next five years.

Cost remains an important consideration, with 59% agreeing it is still a defining factor when businesses engage with workplace pension providers. However, as the industry increasingly focuses on Value for Money, advisers appear to be taking a broader view of what constitutes value. Almost six in ten (58%) believe member outcomes and support matter just as much as cost, suggesting providers will increasingly be judged not just on charges but on the overall value they deliver throughout a member’s savings journey and into retirement.

Advisers also expect the retirement experience providers offer members to become an increasingly important differentiator. Alongside retirement income solutions (35%), almost a quarter identified digital engagement and AI-enabled support (24%), guided retirement pathways and guidance (23%) and greater personalisation (23%) as features that will increasingly set workplace pension providers apart.

The findings also highlight why advisers believe retirement support is becoming increasingly important. More than half (54%) say workplace pensions struggle to generate meaningful engagement because most employees disengage from their pension until later life, while 45% point to employees prioritising immediate financial needs over longer-term retirement planning.

When employees do begin thinking about retirement, advisers believe many would benefit from greater support. Nearly four in ten (39%) say most employees do not engage with retirement until it is very close, while almost a quarter (24%) believe employees underestimate how complex retirement decisions can be.

The findings suggest advisers increasingly expect workplace pension providers to demonstrate how they can support members throughout their savings journey and into retirement. As the market continues to evolve, retirement support is emerging as an increasingly important part of the overall workplace pension proposition.

Stuart Reid, Distribution Director for People’s Pension, said:

“Supporting people at retirement is a very different challenge to helping them save. Automatic enrolment has brought millions of people into pension saving through a relatively simple framework, while retirement is much more individual. Members arrive with different pot sizes, circumstances, priorities and expectations of what retirement will look like.

“That diversity is one of the reasons retirement has been a much tougher challenge for the industry to crack. There isn’t a single journey that will work for everyone, particularly for providers serving millions of members from across the UK.

“Scale also gives providers an opportunity. As more members reach retirement, we’re building a much richer understanding of the choices people make, where they need support and how those needs differ across our membership. That experience can help us develop retirement propositions that better reflect how people actually want to use their pension savings.

“That’s why retirement support is becoming such an important differentiator. The providers that stand out will be those that can use what they learn from their members to give people the right support, at the right time, whatever their circumstances.”

People’s Pension responds to Pensions Commission consultation

Patrick Heath-Lay, CBE, Chief Executive Officer for People’s Pension1, said: “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. 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.”