2 July 2025
The Institute and Faculty of Actuaries (IFoA) supports the findings on pensions adequacy and the pensions triple-lock in today’s Institute for Fiscal Studies (IFS)-led report, ‘The Pensions Review: final recommendations’. The IFoA has been on the review advisory board for the past two and a half years, helping to shape the report and recommendations.
Glyn Bradley, IFoA Pensions Board Chair, said:
“The IFS report provides an important and wide-ranging contribution to the pensions adequacy debate which our society needs to have. The IFoA looks forward to the Government’s upcoming pensions adequacy review and to sharing our insights.
“One focus for the IFS is the role of auto-enrolment which uses employee inertia to drive up pension scheme membership and minimum contribution levels but also provides employees with the freedom to opt out. Opting out to increase immediate take home pay can mean these employees are losing both tax relief and their employer contributions because they cannot afford to save.
“Where people can afford to save more, their current defined contribution (DC) rates may be misleadingly low for the retirement they expect. A nudge for higher earners to contribute more will help narrow this pensions gap.
“We also need to help people use their savings well, and that includes managing the uncertainty of how long they will live. Annuities will have a part to play, but the Government should focus on enabling other choices for UK savers including through multiple employer and retirement-only collective defined contribution schemes. There is urgency to make sure these options are available when schemes think about their guided retirement duties under the pension schemes bill currently in parliament, which will be coming in the next few years.
“Advice and guidance can give people more confidence with their savings. We would like to see policy makers and the industry exploring ways to make it easier to pay for advice out of savers’ pension pots.
“The IFS recommendations also consider the role of the pensions triple lock. We share the concern that increasing state pensions over the long term faster than both earnings and inflation, is at odds with almost every other area of state spending.
“The triple-lock is often described as providing protection, but we need to consider whether its indefinite escalation is the best way to protect those in need of support across all generations. A long-term approach would be to set out what the affordable level of the state pension should be and how to maintain that relative to prices and earnings. This should help all members of society have confidence in the long-term sustainability of the state pension and the base that they can build their retirement planning on.”
~ENDS~
Definition of triple lock: The ‘triple lock’ refers to the UK government’s policy for increasing the State Pension each year. It guarantees that the pension will rise by the highest of three measures: inflation, average earnings, or 2.5%. This ensures that the pension’s value doesn't fall behind in any of these areas.
Link to IFS report: The Pensions Review: final recommendations, Institute for Fiscal Studies. July 2025.
Links to previous IFoA work:
Freedom and choice: public attitudes a decade on, Institute and Faculty of Actuaries. April 2025.
The concerns of Gen Z, Institute and Faculty of Actuaries and Pensions Policy Institute. February 2025.
How much could you lose? Opening the conversation on closing the pensions gap, Institute and Faculty of Actuaries. September 2024.
Hannah Patmore, Communications Manager, IFoA
Tel: 07519106714
Email: hannah.patmore@actuaries.org.uk
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