The UK Chancellor, Rachel Reeves, is set to announce the creation of an independent Pension Adequacy Commission during her Mansion House speech on 15 July 2025. The new body will examine whether current workplace pension-saving requirements offer sufficient retirement income for most workers and is expected to report its recommendations in late 2026.
The commission’s remit, according to government briefings, will include an assessment of minimum auto-enrolment contribution rates — currently set at 8% of qualifying pay, with 3% contributed by employers. It will also address the interaction between the state pension and private retirement saving, including the controversial “triple lock” uprating formula. A further focus will be the challenge of extending formal pension coverage to the UK’s five million self-employed, who are largely excluded from existing arrangements.
Officials say the aim is to settle key questions of adequacy before considering any further increase to statutory contributions, a move that would also seek to channel a greater pool of long-term capital into UK growth assets — building on last year’s Mansion House reforms. No statutory rate changes are expected during the current parliament. However, business groups are already preparing for the prospect of higher payroll costs from 2027 or 2028, should the commission recommend a phased uplift.
Current contribution rates under scrutiny —
Recent analysis by the Institute for Fiscal Studies (IFS) highlights the scale of the adequacy gap, with 39% of private-sector employees and 63% of the self-employed projected to retire on insufficient income under current policies. The IFS’s final Pensions Review, published this week, suggests that minimum contribution rates of 12%–14% may ultimately be required for middle-income savers to achieve adequate retirement standards. Employer groups, however, have warned that such an increase would coincide with April 2025’s scheduled rise in National Insurance, placing added cost pressure on firms.
On the state pension side, the commission is expected to review the sustainability of the triple lock, which the IFS calculates could add between £5 billion and £40 billion a year to government spending by 2050. Alternatives such as a “smoothed earnings link” are likely to be considered as part of the inquiry.
For the self-employed, the commission will examine mechanisms to encourage or require pension saving — including potential HMRC “nudges” via the Self-Assessment tax process. Currently, just one in five self-employed workers contributes to a pension.
The second phase of the UK pensions review was postponed last December due to concerns about employer costs. Reopening the debate signals a renewed willingness by the Treasury to address long-standing structural issues, despite continued cost headwinds.
The move also aligns with the government’s broader strategy to unlock more productive finance from defined-contribution schemes, a key aim of the Mansion House reforms. The Treasury estimates these could funnel an additional £50 billion into UK growth assets over the coming decade.
Any legislative changes arising from the commission’s work are unlikely before 2027, with implementation expected to be staggered over several years, in line with the approach used during the last auto-enrolment roll-out between 2012 and 2019.
