People drawing their pension 25 years from now are set to be £800 or 8% worse off per year than their counterparts today, the department said, with four in 10 people currently not saving enough for their retirement.
Rather than launching a new commission from scratch, the government said it was reviving the “landmark” Turner Pension Commission which reported in 2006, under the last Labour government, and led to the roll-out of automatic enrolment into pension saving. As a result 88% of eligible employees are now saving, up from 55% in 2012, the DWP said.
Despite that progress, the DWP said new analysis revealed “stark” findings including that:
more than three million self-employed workers are not saving into a pension
only one-in-four low earners in the private sector are saving into a pension
only one-in-four of people of Pakistani or Bangladeshi heritage are saving
The analysis also found a 48% gender gap in private pension wealth among people currently retiring, with a typical woman receiving just over £100 a week and a man receiving £200 from private pension income.
The commission is not designed to directly address issues around the cost of the state pension.
Recent reports have raised questions over the affordability of the “triple lock”, introduced in 2010, which guarantees that state pensions will rise every year by the same amount as average wages, inflation, or 2.5%, whichever is higher.
As the population ages, and people live longer, the cost of that policy is set to grow significantly.
Its cost is forecast to be three times higher by the end of the decade than was original estimated, after successive years of high inflation, followed by strong wage growth.