Alexandra Miles of the Institute and Faculty of Actuaries introduces new research laying out the realities of the pension system inequalities that the Pensions Commission is seeking to address.
Dear Pensions Commission…
How big is the pension gap? It’s a deceptively simple question – yet answering it requires us to first define what ‘good’ looks like. What do we, as a society, deem an acceptable standard of retirement, for whom, and from when? And how are we doing against this definition?
The Institute and Faculty of Actuaries’ (IFoA) Pensions Gap Working Party has recently published its latest report, ‘A pension system fit for the 21st century’. The report is accompanied by the launch of a new film telling the stories behind our pension gaps.
Together, these offer a thoughtful and evidence-based contribution to the ongoing dialogue around pension adequacy and inclusion. It doesn’t seek to reinvent the system, but rather to evolve it – through practical, people-informed recommendations that reflect the realities of today’s workforce.
The report challenges the framing of pension gaps, such as the term ‘gender pension gap’. This is a distraction from the bigger question we must ask: what does adequacy look like for everyone? And how are we all doing? How do we build a system that better supports dignity and security across the board?
Understanding inequalities and imbalances
At its core, the report and film acknowledge that pension adequacy is shaped not only by scheme design, but by broader labour market inequalities. How much someone earns, and how many hours they are in paid work, remain the most significant drivers of retirement outcomes.
“Any evolution in the design of the current system must fully recognise the trajectory we are on and look to mitigate its impact wherever possible for current and future generations of retirees.”
Alexandra Miles, IFoA
Structural factors that sit largely outside the direct remit of the pensions industry – such as the undervaluation of care work, ageing populations, and declining fertility rates – also profoundly affect the future sustainability of any solution. Any evolution in the design of the current system must fully recognise the trajectory we are on and look to mitigate its impact wherever possible for current and future generations of retirees.
Through a blend of actuarial modelling and filmed research, the IFoA’s working party has surfaced the lived experiences of those most affected by pension gaps: part-time workers, freelancers, and the self-employed. These insights are not anecdotal but representative of a growing segment of the workforce whose financial trajectories do not align with the legacy pension structures of those already happily retired.
Based on the evidence, the report’s recommendations are pragmatic and build on existing frameworks. Proposals include:
- Flexible auto-enrolment for the self-employed
- UK Child Saver accounts to embed savings culture from birth
- Pension defaults that adapt to life events, such as parental leave or reduced working hours
These are not radical departures, but thoughtful enhancements aimed at improving continuity and engagement.
Engagement and collaboration
The report and film also highlight a persistent challenge: member disengagement. Many participants struggled to name their pension provider or felt overwhelmed by communications. This signals a need for clearer messaging, intuitive tools, and stronger brand connection. Rebranding pensions to reflect clarity, purpose, and relevance could help bridge the gap between providers and members, especially those without access to traditional workplace schemes.
Finally, the report explores the potential of community-based pension models. Inspired by cooperative structures and mutual aid traditions, these approaches offer new pathways to inclusion, particularly for those outside conventional employment and so without access to occupational pension schemes. While still exploratory, they merit further investigation as part of a broader effort to reach underserved groups.
As the UK undertakes a major pensions review, the report and film offer a grounded and inclusive perspective. They recognise the limits of what pension scheme design alone can achieve, while offering practical steps to improve outcomes within those boundaries.
Alexandra Miles is chair of the Institute and Faculty of Actuaries’ Pensions Gap Working Party.
