The pensions system is not fit for the modern day, the Institute and Faculty of Actuaries has said. Based on ethnographic research by Ipsos, it recommends auto-enrolling the self-employed via tax returns, a savings account from birth and pension products which auto-flex for life events, to close systemic pension gaps among the self-employed, part-time workers and those facing unexpected life changes. 

As the new Pensions Commission is undertaking its work to look at what is needed to future-proof the pension system and make it fairer, the IFoA has produced a report, ‘A pension system fit for the 21st century – the stories behind pension gaps’, in partnership with Ipsos.  

The report shows pension gaps are embedded in systemic design, said Alexandra Miles, who chairs the IFoA Pensions Gap working party. “Our hope is that these findings and recommendations spark urgent, practical action to evolve and adapt a pensions system so that it remains fit for the 21st century – and one that supports dignity, security, and purpose for everyone,” she said.  

Paul Sweeting, the new IFoA president, said it is incumbent on industry, government, and consumer representatives to make sure the pensions system provides financial security for all in retirement. 

Speaking at a launch event on Tuesday, he said the research brings fresh evidence on the extent of the pensions gap, who is most at risk, why these gaps arise and how perceptions for preparing savers differ from reality.  

“For the IFoA, this matters deeply. As actuaries, we are committed not only to technical excellence, but also to our public interest role, using data, insight and foresight to inform better decisions for individuals and society. It's also an important reminder that pensions are not just about numbers. They're about people's lives, the real-life choices they make on a daily basis, their dignity in older age and their ability to plan for the future with confidence,” he said. 

Based on the findings of the research, the IFoA recommends:  

 

The recommendations are made in response to the report’s findings that pension gaps exist partly because the current pension system does not reflect modern working patterns for an increasing number of people.  

The UK pension system still assumes long, uninterrupted careers with one employer, the IFoA says, and systematically disadvantages people who are self-employed, work part-time, or need to change their job pattern. For example, fewer than a fifth (18%) of self-employed people are saving for retirement, while the vast majority of employees do, according to the IFoA. 

Pensions minister Torsten Bell called the report an “important contribution” to debates about pensions reform, adding: “We have revived the Pensions Commission to put Britain back on track for a stronger and fairer pensions system.”  

Using filmed research and interviews, the study investigates how pension gaps start and why they tend to persist.   

Business anthropologist at Ipsos, Lucy Neiland, said by deep diving into the experiences of freelancers, self-employed and part-time workers, they team has uncovered some of the cultural norms and nuanced realities that underpin pension gaps today.   

“This collaborative effort with the IFoA not only challenges conventional assumptions but also sets a stage for meaningful transformation in how pension policies could be more reflective and inclusive of modern working lives,” she said. 

The research builds on a previous study by the IFoA from September 2024, ‘How much could you lose? Opening the conversation on closing the pensions gap’. This explored the hidden costs of life decisions on retirement income.