The government has announced the revival of the Pensions Commission, twenty years after it helped bring in automatic enrolment. Its goal is to stop future pensioners from being worse off than those retiring today.
New government analysis suggests some worrying trends:
- 45% of working-age adults are saving nothing into a pension
- 4 in 10 people are undersaving for retirement
- Self-employed workers, low earners and some ethnic minorities are most at risk of falling behind
- There’s a 48% gap in private pension wealth between men and women
It’s estimated that people retiring in 2050 could see 8% less private pension income than today’s pensioners.
What’s the Commission going to do?
The newly revived Commission will look at what may be stopping people from saving enough and will issue its final report in 2027.
What does this mean if you’re a business owner or self-employed?
If you're self-employed or run a small business, this news is a reminder to check in on your own retirement planning. The figures suggest that 3 million self-employed people aren’t saving into a pension.
However, these figures don’t factor in that many business owners look to use their business as their pension. For instance, you may be planning to sell the business or property within it to fund retirement.
Whatever the case, it’s practical to regularly review your planning to check that you will have enough to retire on. Contributing to pensions also carry some tax advantages which can be worth factoring in.
Possible effects on employers could include auto-enrolment being expanded with increased costs or administration work. It’s too early to know what the Pension Commission will recommend, but it could pay to watch developments so that you can be prepared.
Andy Burnham’s first days as Prime Minister have been marked by a flurry of announcements designed to show that his government intends to move quickly. Presenting himself as a leader focused on easing pressure on households and rebuilding trust in politics, Burnham has begun reshaping government while signalling the priorities that will define his administration.
HMRC have opened a consultation, ‘Modernising the taxation of distributions and repayments of capital from companies’. They are seeking views on proposals to modernise the tax framework dealing with distributions made by companies to shareholders who are individuals or trusts.