Labour Plans Pension Reform Forcing Millions To Save More

The Labour government is undertaking a major overhaul of the UK pension system to address concerns about inadequate retirement savings and the risk of poverty among future retirees. Central to this effort is the reintroduction of the Pensions Commission, which will examine barriers to saving and propose measures to increase pension contributions, potentially requiring workers to save significantly more, with companies also expected to boost their matching contributions. Proposals include the introduction of a 'sidecar savings' account allowing workers to access some pension savings early in emergencies, and a review of the state pension age with considerations to raise it beyond the current plan to reach 67 by 2028 and 68 by 2046 due to demographic and financial pressures. Analysts warn that without increased savings, future retirees could receive substantially less than current pensioners, with nearly half of working-age people currently not contributing to pensions. The Commission will aim to build a sustainable, fair, and strong pension system, balancing input from business and unions, while recognizing the financial challenges workers face amid cost-of-living pressures. The government is committed to gradually increasing contribution rates from the current 8% of salaries to potentially 12%, reflecting the need for higher savings to ensure secure retirements.