Pensions Commission publishes interim report
Pensions Commission publishes interim report
01 Jul 2026
The Pensions Commission’s interim report highlights growing pressures on the UK retirement system, with millions at risk of falling short of the income they expect in later life.
While the system has a strong foundation, shifting demographics and changing working patterns are raising important questions for the future.
Our latest briefing explores the key themes and the potential implications for future retirement outcomes.
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What you need to know
- The second Pensions Commission was established in 2025 to review whether the UK pensions system remains fit for purpose for the coming decades. It follows the original Pensions Commission, whose recommendations led to major reforms, including automatic enrolment and the new State Pension.
- The Commission’s interim report examines the challenges facing future retirees and identifies areas where the current system may not deliver adequate income in retirement. While it states that the pension system has a strong foundation, it argues that around 15 million working-age individuals are on course to fall short of target retirement income levels.
- The report highlights that future pension outcomes are likely to be affected by longer life expectancy, changing working patterns, declining home ownership, and increasing pressure on public finances.
- It also raises concerns about significant disparities in pension outcomes across demographic groups, low levels of pension awareness among those making retirement decisions, and gaps in provision for certain groups, particularly the self-employed.
- A final report, expected in 2027, will make recommendations for future pension policy.
The key themes of the Pensions Commission's interim report
Pensions Commission - Interim report: The finer detail
| Adequacy, not just participation |
The key test is whether individuals achieve an adequate standard of living in retirement. While auto-enrolment has significantly increased participation, around 15 million working-age adults are still under-saving for retirement. This highlights a central challenge in the report: how to define what constitutes an “adequate” retirement income. Traditional measures, such as replacement ratios and minimum income benchmarks, may need to be replaced with a hybrid measure to encompass the diverse needs of different earners. |
| Under-saving and low minimum contributions |
Many individuals are under-saving, with the 8% auto-enrolment minimum unlikely to deliver adequate outcomes – particularly for median earners contributing at the minimum throughout their working lives. |
| The effects of retiring early |
It is becoming increasingly common for individuals to leave the workforce in their 50s. Reducing the time spent accumulating a pension and longer life expectancy means more reliance will be placed on the State Pension. The report states that 42% of people access their pension pots before they are retired from employment. For many, this is to allow for reduced working hours, but the Commission questions whether there is sufficient understanding of how early access affects long-term retirement income. |
| Unequal outcomes and coverage gaps |
The report highlights persistent inequalities in pension wealth. Women approaching retirement typically have less private pension wealth than men. Disabled people, carers and some ethnic minority groups also face a higher risk of lower retirement incomes. Only a small minority of those who are solely self-employed actively contribute to a pension arrangement. |
| Flexibility | Over recent decades, workplace pensions have become more accessible and flexible. However, the report questions whether individuals fully understand how their decisions affect long-term outcomes. The report notes that 48% of defined contribution (DC) pots are fully withdrawn as cash, and alongside the decline of the annuity market, this suggests that many are not planning for “income for life”. The continual decline of defined benefit provision will further affect retirement income for future retirees. |
| Housing, assets and generational change |
The report stresses that future retirement outcomes will depend not only on pensions but also on housing, wider assets and inheritance. It warns that younger cohorts are less likely to benefit from home ownership and more likely to face housing costs in retirement. |
| State Pension triple lock |
No immediate changes are proposed, but the report acknowledges the growing debate around its affordability and long-term sustainability. |
| Longer lives and system pressures |
The number of people aged 75 and over is projected to roughly double between 2025 and 2075, increasing pressure on adequacy, affordability and long-term sustainability. |
| Pensions investment understanding |
Pensions are complex and often misunderstood. The report highlights that 31% of DC pot holders were unaware their pension was invested, and over half did not realise fees were being charged. In a landscape where many future retirees rely solely on DC savings, individuals are increasingly bearing the risks of decisions they may not fully understand. |
| What comes next? |
This interim report is intended to frame the evidence, trade-offs and key policy questions ahead of final recommendations expected in 2027. |
Find out more
For further information, please get in touch with Catherine Fensom, Laura Sherry or speak to your usual XPS Group contact.
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