The Institute for Fiscal Studies has cited “a dangerous lack of strategic oversight” of UK pensions as it prepares to kick off a mammoth review of the retirement system next week. A first report is due to be published this autumn before a final report in summer 2025. 

 

The IFS said that “the time is ripe for a comprehensive review of pensions policy”, which will look at the consequences of current pension policy, the economic environment and individual behaviour. It is launching the two-and-a-half-year project on 20 April and will make recommendations for reform.

 

The last large-scale review was the Turner commission, which in 2005 recommended introducing auto-enrolment. Since then, the UK has been through a global financial crisis, a pandemic and the highest levels of inflation in 40 years, the institute pointed out. Meanwhile, homeownership rates have fallen, and there has been a significant rise in self-employment with the growth of the gig economy.  

 

Given the scale of these changes, and others around the state pension and working age benefits, the IFS argues that there has been “a dangerous lack of strategic oversight of the retirement saving system since the Pensions Commission disbanded”.  

 

It will speak to policymakers in government, civil servants, the opposition, the pensions industry and third-sector organisations for older people for its pensions review, which is sponsored by the Abrdn Financial Fairness Trust. 

 

The review will ask three main questions:  

 

The institute said a central theme will be the risks facing savers and pensioners regarding their standard of living in retirement.  

 

“With the demise of private sector defined benefit arrangements, of state earnings-related pensions and of annuities, individuals are increasingly bearing all the risks associated with accumulating saving for retirement, and with decumulating their pension pots through retirement, in a way which was not true in the past,” the IFS noted. 

 

IFS director Paul Johnson, deputy director Carl Emmerson and associate director Jonathan Cribb will lead the review, while its steering group is made up of former Labour chancellor Alistair Darling, who now chairs the Abrdn Financial Fairness Trust, former Conservative Treasury minister and work and pensions secretary David Gauke, and independent trustee and former chief executive of the Pensions and Lifetime Savings Association, Joanne Segars.  

   

   

Johnson said last year that the UK no longer has a private pension system, accusing the government of complacency over pensions policy. He also noted that pensioner incomes and wealth both currently exceed those of working age people, saying there was a “big question for the future whether that is something that is actually desirable”. 

 

      

In February this year, the institute proposed to reform pensions taxation, branding many features of the current pensions tax policies “arbitrary, wasteful or unfair”.  

 

    

The IFS pension review’s preliminary findings will be published over the next two years, with the first main report due this autumn. Key findings and recommendations for reform will be published at launch events in London and Edinburgh in early summer 2025. 

 

Those with a professional or research interest who would like to share their insights are invited to do so by writing to pensionsreview@ifs.org.uk. 

 

The review comes after the Work and Pensions Committee's three-part inquiry looking at pensions five years after the freedom and choice reforms which concluded last year.  

 

In 2018, the Financial Conduct Authority published the final report of its Retirement Outcomes Review, which among others led to the introduction of investment pathways in 2021. Pathways – four options described according to what the individual plans to do with the money in the next five years – are now also being considered by the Department for Work and Pensions for the trust-based environment.