Question to the Department for Work and Pensions:

To ask the Secretary of State for Work and Pensions, what steps she is taking to help ensure that people in (a) low-paid and (b) insecure work receive an adequate income in retirement.

The new State Pension has been designed to provide a foundation for private saving, supported through Automatic Enrolment (AE). The new State Pension improves State Pension outcomes for those who often did less well under the previous system, including those on low incomes. Alongside qualifying through work or self-employment, there is also a wide range of National Insurance credits available, ensuring people can achieve the best possible State Pension outcome.

We have made a commitment to the Triple Lock throughout this Parliament which will mean spending on people’s State Pensions is forecast to rise by over £31 billion. As a result, over 12 million pensioners will receive up to £1,900 a year more by the end of the Parliament. Pension Credit also provides a means-tested safety-net for those on low-incomes in retirement.

AE has succeeded in transforming retirement saving with over 11 million employees having been automatically enrolled into a workplace pension since 2012. AE has been a particular success for lower earners with participation for eligible employees earning between £10,000 and £20,000 in the private sector, increasing from 17% in 2012 to 75% in 2023. However, we know we need to do even more to build on the success of AE in getting people into saving by ensuring security in retirement for all.

The first phase of our review is focused on investment and growth with the twin objectives of increasing investment in the UK and delivering improved returns for savers. In November 2024 we published the interim report of this review with consultations on unlocking the UK pensions market for growth and reforming the Local Government Pension Scheme. These consultations closed in January, and we expect to provide our response in Spring 2025.

However, it is also important that we then consider the broader question of adequacy and how to build on the success of AE to ensure that people are saving enough for retirement. Therefore, the second phase of the review will in due course look at further steps to improve pension outcomes, and pension adequacy for all.