Government and Employer Initiatives to Improve the Pensions of the Future

After temporary disappointment at the omission of any reference to the Pensions Adequacy Review in the Mansion House Speech, less than a week later, the government announced the revival of the Pensions Commission to carry out that review.

This follows a number of other initiatives that have recently been launched by employers and others in the industry, aimed at improving retirement outcomes for workers.

All employers will want to note the developments and the relevance to their own workforces so as to ensure a more secure retirement for future generations of pensioners. 

Revival of the Pensions Commission

On 21^st July 2025, the government announced the revival of the Pensions Commission, originally established in 2006, to “complete the job” (as stated by Pensions minister Torsten Bell) in seeking to address the risk of poverty in retirement in the future. 

This renewed effort responds to alarming data showing that a large proportion of working-age adults are not saving into pensions, with low earners, ethnic minorities, and the self-employed most affected. Without intervention, a substantial number of workers could fall short of an adequate retirement income, with retirees in 2050 potentially facing an 8% drop in private pension income compared to today’s levels. Analysis further revealed a stark private pension wealth gap between women and men of 48%. 

The welcomed revival of the Pensions Commission will look to support both employees in building up their savings and employers in managing their costs. 

The Commission’s final report, expected in 2027, will set out reforms to ensure a more secure retirement for millions. 

More information on the Pensions Commission can be found here. 

Employers will note that whilst there has been talk of increasing contribution rates, Torsten Bell has said (as reported in the Financial Times), “We are ruling out any increase in pension contributions in this parliament”. 

So, there is change a-coming, but not in this parliament. In the meantime, some employers have pledged to change the way they review or select pension providers…

Employer Pension Pledge

The difficulties with making changes to automatic enrolment obligations is that any increase in contributions to achieve higher retirement incomes is going to impact workers’ take-home pay now.  This would be particularly unwelcome for lower earners given the current economic climate.

Therefore, employers and other in the industry are seeking other ways to address low pensions for savers by focusing on investment performance and value for money.

On 14^th July 2025, over 20 of the UK’s largest employers signed the new Employer Pension Pledge, committing to prioritise pension value over cost when selecting or reviewing pension providers. 

Led by the Lord Mayor of London, the initiative aims to shift pension investment culture toward better outcomes for savers. Since it is typically employers - not employees - who choose which pension scheme workers are invested in, the pledge encourages employers to take a more active role in evaluation of investment strategies. It promotes a focus on long-term value for money when selecting a pension fund to deliver the best retirement outcomes for their employees.

It may also help to secure funds which are more consistent with religious beliefs to reduce the number of ethnic minority workers from opting out of their pension arrangements. An Institute for Fiscal Studies think-tank found that religious beliefs were an “important” factor behind opt-out rates.

The Employer Pension Pledge complements existing government efforts like the Mansion House Compact and aligns with the upcoming Value for Money framework.

More information on the Employer Pension Pledge can be found here. 

The Lord Mayor of London has said “I look forward to welcoming many more organisations – large and small – to join the existing signatories”. 

We suggest all employers will want to consider the balance between member value and cost in their own defined contribution pension arrangements. 

Other developments

The government has also announced that it is appointing Suzy Morrissey of the Pensions Policy Institute to start a review of the state pension age, which is already due to rise to 67 by 2028.

The market is already starting to respond to the measures in the Pension Schemes Bill relating to “guided retirement” in anticipation of the new duty to provide better default pension benefit solutions, with the Aviva master trust launching its “guided retirement” product.

Together, these initiatives signal a coordinated push to address pension adequacy, improve investment strategies, and ensure a more secure retirement for future generations.

This article has been written by Nancy Purle (Solicitor), Kelly Beattie (Senior Associate) and Chris Brown (Partner). If you would like to discuss these measures further, please contact any of them or your usual contact in the Burges Salmon Pensions and Lifetime Savings Team. 

The relaunched Commission will explore the complex barriers stopping people from saving enough for retirement, with its final report due in 2027. It will examine the pension system as a whole and look at what is required to build a future-proof pensions system that is strong, fair and sustainable.

https://www.gov.uk/government/news/government-revives-landmark-pensions-commission-to-confront-retirement-crisis-that-risks-tomorrows-pensioners-being-poorer-than-todays