The pensions industry has broadly welcomed the interim report from the Pensions Commission, with industry figures warning that urgent action is needed to tackle widespread undersaving and improve retirement outcomes for future generations.

The commission warned that 15 million people in the UK are currently undersaving for retirement, with the number potentially rising to 19 million without intervention, while low and middle earners, women, and the self-employed were identified as at particular risk.

Reacting to the findings, The Pensions Regulator (TPR) chief executive, Nausicaa Delfas, said the pensions system remained “unfinished business”.

“That is why we welcome the Pensions Commission report, and look forward to continuing to work with the commission, government and industry to create a system which delivers what matters most: a sustainable income in retirement for everyone," she added.

The Pensions Management Institute (PMI) chief strategy officer, Helen Forrest Hall, described the report as a “wake-up call”, warning that “incremental change will not be enough”.

“The Pension Schemes Act is a strong start, but the industry needs bold and innovative solutions on the scale of automatic enrolment to deliver adequate retirement incomes," she said.

Similarly, Standard Life CEO, Andy Briggs, warned that the UK was “edging ever closer to a pensions adequacy crisis”.

“It is hard to see how any independent review could conclude that auto-enrolment contributions set at 8 per cent are sufficient,” he stated.

“While change cannot happen overnight, we should be setting a clear path towards increasing contribution rates to 12 per cent gradually over time.”

Pensions UK chief executive, Julian Mund, also said the industry shared the commission’s view that systemic reform was needed to deliver sustainable retirement incomes.

“Evidence presented in the report clearly strengthens the case for more pension saving over longer working lives, alongside systemic change that delivers sustainable incomes - building on welcome reforms in the Pension Schemes Act," he added.

Pressure grows for higher contributions

Several industry figures suggested the report signalled future policy changes around contribution rates and retirement saving rules.

LCP partner, Steve Webb, argued that it pointed towards higher contribution rates in the future, alongside tighter rules around accessing pension savings.

“The report makes a lot of the way in which previous increases in contributions, both in the UK and Australia, have happened gradually and with many years for people to prepare,” he explained.

“This is a strong signal of higher contribution rates in the 2030s, possibly on a wider band of earnings.”

Webb also suggested there could be “tighter rules” around pension freedoms, with stronger defaults encouraging savers to opt for regular retirement income rather than lump-sum withdrawals.

People’s Pension chief executive officer, Patrick Heath-Lay, said the next phase of the commission’s work would need to build consensus between employers, trade unions, the pensions industry and the public.

“The progress on pension reform that the UK has made in the past 20 years shows the value of a consensus that survives multiple parliaments and changes in government,” he stated.

“However, the economics of reforming the system are more difficult now than in the early 2000s. People need to save more, but forecasts for household income growth are challenging.”

TUC general secretary, Paul Nowak, also called for a “bold plan” from the commission, arguing that higher employer contributions would need to form part of the solution.

Focus on inequality and later working lives

Several organisations stressed the importance of tackling labour market inequalities and supporting older workers as part of any long-term pensions solution.

Centre for Ageing Better deputy director for work, Dr Andrea Barry, noted that the report rightly highlighted how labour market inequalities translated into pension inequalities later in life.

“Early, abrupt and often unplanned ends to people’s working lives in their 50s and early 60s is a major risk to pension adequacy,” she warned.

“The government needs to ensure that fewer people leave the labour market with years to go before state pension age and without the necessary financial resources for an adequate retirement.”

Barry also pointed to the wider economic importance of supporting older workers to remain in employment for longer, arguing that this would become increasingly important as the population ages.

L&G Retail CEO, Laura Mason, meanwhile, welcomed the commission’s focus on Generation X savers.

“The commission is right to highlight ‘Gen X’ or ‘midlifers’ as a priority,” she said.

“We found that this group is among the least engaged with their pensions, despite time running short.”

Self-employed and excluded groups remain key concern

Industry commentators also highlighted the need to improve pension participation among groups currently underserved by the system, particularly the self-employed.

Scottish Widows head of pension policy, Pete Glancy, said there was an “urgent and pressing need” to improve retirement saving among self-employed workers.

Broadstone head of policy, David Brooks, described the findings as a “stark reminder” of the UK’s pension savings challenges, particularly for lower earners and the self-employed.

“Too many people are either saving too little or not saving at all, which will create a significant financial issue at retirement,” he stated.

Aegon head of pensions, Kate Smith, also warned that millions could face poverty in retirement without urgent action.

“Working lives and employment have changed dramatically since the first Pension Commission recommendations 20 years ago,” she stressed.

“Policies need to evolve to reflect people’s often disjointed working lives.”

Meanwhile, ABI director of long-term savings policy, Dr Yvonne Braun, said the report made a “powerful case for a new national settlement for pensions”, while Which? director of policy and advocacy, Rocio Concha, welcomed the report’s focus on increasing private pension saving and improving retirement outcomes.

The commission is expected to gather evidence from stakeholders over the coming year before publishing its final report and recommendations in early 2027.

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