17 June 2026
The Second Pensions Commission has published its interim report. At 190 pages, it is detailed and wide-ranging. But for many employers, much of it will feel familiar. The same questions run throughout. Are people saving enough? Is the system fair? And are we genuinely set up to deliver good member outcomes over time?
In that sense, the report does not introduce a new agenda. Instead, it strengthens an existing one. It brings together a robust evidence base behind issues that employers have been grappling with for years. And that matters. It signals that these challenges are no longer just market conversations. They are now firmly part of the national policy direction.
The Commission’s recommendations will follow in 2027. But employers do not need to wait. Much of what sits in this report already points clearly to where focus is needed.
Below, we set out the themes we think matter most for corporate sponsors.
The report is clear about who the system does not serve well. The gaps are significant, and in some cases widening.
Median private pension wealth for those aged 55 to 59 stands at £156,000 for men and £81,000 for women. That points to a gender pensions gap of 48%. Participation is also much lower for some ethnic groups, with around one in four working-age Pakistani and Bangladeshi adults saving into a pension, compared to more than one in two for the White working-age population. For disabled people, the picture is equally stark. More than half have no private pension wealth by their mid-40s.
These are not abstract policy concerns. Employers will recognise these patterns in their own workforce data.
A useful starting point is simple: who is actually in your scheme? Looking beyond headline participation rates often reveals a more uneven picture. Eligibility rules, opt-out rates and contribution behaviour can vary materially across demographic groups. Lower-paid and part-time workers are often underrepresented, but the gaps are rarely limited to those groups alone.
The report also pushes the conversation beyond traditional employment models. The UK now has a large and growing population of workers outside standard employment structures. Contractors, agency workers and the self-employed are a routine part of many organisations’ operating models.
Here, the data is striking. Only 17% of the UK’s 4.4 million self-employed people are saving into a pension. That falls to just 4% for those whose income comes purely from self-employment. At the same time, the structure of self-employment has shifted. The ‘solo’ self-employed now account for 86% of the total, up from 73% in 2001.
These individuals sit outside automatic enrolment by design. That means the question for employers is not one of compliance. It is more fundamental. Are you taking a consistent approach to long-term financial wellbeing across your workforce, or accepting different outcomes for different groups?
Participation is only part of the story. Contribution levels matter just as much.
Automatic enrolment was designed as a starting point. The expectation was that minimum contributions would provide a foundation, with additional voluntary saving building on top. In practice, that has not happened at scale.
Around a third of eligible private sector employees contribute only at minimum levels. Among lower-paid workers, that rises to around half. Above the minimum, additional saving is limited. The median employee contributes just 1.7% more than the statutory baseline.
Crucially, where higher contributions do exist, they are typically driven by employer design rather than individual choice. In effect, the statutory minimum has become the norm.
This creates a different kind of design challenge. Increasing participation is not enough if contribution levels remain low. Employers do not need to wait for policy change to act here. The levers are already clear:
These are practical design decisions. They can be modelled, tested and implemented now. Waiting until minimum contribution rates increase risks creating a more abrupt and less controlled transition later.
Two related themes run through the report that often sit outside traditional pensions conversations. The first is low financial resilience among working-age savers. The second is declining home ownership.
The projections are clear. Home ownership among those aged over 65 is expected to fall from just under 80% today to below 70% by 2050. At the same time, the proportion of pensioners in poverty who are renters is expected to rise sharply.
Financial resilience during working life remains uneven. Many people have limited capacity to absorb financial shocks, which in turn affects their ability to save consistently for retirement.
For members, these issues are closely linked. Retirement saving, housing costs and day-to-day spending all compete for the same income. For younger workers in particular, this creates real trade-offs. If pension design does not recognise these trade-offs, members will manage them themselves. That often leads to outcomes such as opting out of pension saving, reducing contributions, or making suboptimal financial decisions more generally.
There is no single solution to this. But there is a clear implication. Pension strategy cannot sit entirely in isolation from broader financial wellbeing.
Employers can start by recognising the interaction between short-term and long-term financial needs. Designs that support both are more likely to be effective. Sidecar savings models, such as those trialled by Nest Insight, are one example of how this balance can be approached. But the wider point is about designing with a realistic view of how members manage their finances in practice.
The Commission is clear that longer working lives will play a central role in future retirement outcomes. Its modelling shows the scale of the impact. Retiring at 57 rather than 68 reduces a projected pension pot by around 55%. At the same time, labour market data shows a sharp rise in inactivity through the 50s and early 60s. Health and long-term sickness are key drivers, particularly in the early 50s.
This presents a complex challenge for employers. Extending working lives is not simply a pensions issue. It touches on job design, working patterns, career progression and health support.
There are real operational implications. Adjusting roles, supporting flexible working and managing workforce transitions all carry cost and complexity. These are not quick wins.
However, the direction of travel is clear. Waiting is unlikely to make the challenge easier. Employers should begin by asking what longer working lives could realistically look like in their organisation. That includes:
The Commission also highlights what older workers themselves say would help. More flexibility, reduced hours and additional leave all feature strongly. These insights provide a useful starting point, even if the practical implications will vary significantly by employer.
At the other end of working life, the report highlights a different kind of risk. Too many young people are not entering stable employment at all.
Around one million people aged 16 to 24 in the UK are not in education, employment or training (NEET). That represents 12.8% of this age group, above both EU and OECD averages. The composition of this group has also shifted over time. A larger proportion have never had a job, and more report health-related barriers to work, particularly linked to mental health and neurodevelopmental conditions.
The long-term implications are significant. Early access to the labour market plays a critical role in building pension wealth. Missing these early years of saving has a lasting effect, given the role of compounding over time.
For employers, this is not a pension design issue in isolation. It raises broader questions about how people enter and progress within the workforce.
Practical considerations include:
The workforce is changing. Employers that engage early with these shifts are more likely to build inclusive and sustainable workforce models over time.
The report reinforces a familiar but important message. Investment returns and charges remain central to outcomes.
Investment growth can account for up to two-thirds of a final defined contribution pension pot. Even relatively small differences in annual returns can have a material impact over time. A 1% increase in annual returns could result in a pension pot that is around 30% larger at retirement.
Charges also accumulate. Even at the 0.75% charge cap, the report estimates that a member could lose around £15,000 over their working life. Lower charges improve outcomes, but the impact remains meaningful.
At the same time, member awareness is low. More than half of respondents to the Financial Conduct Authority’s Financial Lives Survey reported that they did not know charges applied to their pension at all.
For employers, this remains core governance. But the context is evolving.
Policy initiatives such as the Pension Schemes Bill, the Value for Money framework and proposals for greater consolidation are all designed to improve outcomes. The expectation is that scale will deliver better value for members.
However, scale alone is not enough. The benefits need to flow through.
One area highlighted in the report is differential pricing. Around two-thirds of multi-employer schemes operate pricing structures where similar members pay different charges depending on their employer. This is an area where employers can and should challenge.
More broadly, “we are on the default” is no longer a sufficient position. The default strategy itself, including its cost and performance, needs to be actively assessed.
The report’s treatment of decumulation is one of its most important contributions.
The current system places a high level of responsibility on individuals at the point of retirement. Someone who has been auto-enrolled for most of their working life is suddenly expected to make complex decisions about:
This represents a significant shift from passive saving to active decision-making. The evidence suggests this approach is not working well for many people.
Behavioural outcomes reflect this. Annuity purchases have fallen sharply since the 2014 reforms. A large proportion of pension pots are fully withdrawn at the point of access, particularly for smaller pots. Over the next ten years, around £500 billion is expected to flow out of defined contribution workplace pensions.
The Commission’s view is clear. A system that relies heavily on engagement and decision-making is unlikely to deliver consistent outcomes across the population.
Instead, there is a need for stronger default pathways in retirement. Initiatives such as Guided Retirement, proposed under the Pension Schemes Bill, point in this direction. But their effectiveness will depend on how they operate in practice, particularly for members who do not actively engage.
For employers, this shifts the focus of provider selection and oversight. Accumulation remains important, but it is no longer the whole picture.
Key considerations now include:
These questions are likely to become increasingly central as more members reach retirement with defined contribution savings.
None of the issues raised in the report are entirely new. But the weight of evidence behind them is now much stronger.
This matters. It signals that these challenges will continue to move up the policy agenda. It also provides a clearer framework for employers to assess their own position.
The key message is simple. There is no need to wait for the Commission’s final recommendations. Much of the direction of travel is already clear.
For employers, the focus is on practical action:
Taken together, these actions move beyond compliance. They reflect a more holistic view of what good pension provision looks like today.
If you would like to explore what this means for your scheme, please get in touch.
This blog is based upon our understanding of events as at the date of publication. It is a general summary of topical matters and should not be regarded as financial advice. It should not be considered a substitute for professional advice on specific circumstances and objectives. Where this blog refers to legal matters please note that Hymans Robertson LLP is not qualified to provide legal opinion and therefore you may wish to obtain independent legal advice to consider any relevant law and/or regulation. Please read our Terms of Use - Hymans Robertson.
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