The Guardian view on saving for old age: alarming shortfalls set the scene for a pensions overhaul | Editorial

"Recommendations from the government-backed Pensions Commission are not due until next year. But its interim warning that at least 15 million Britons are not saving enough for retirement already signals the scale of the challenge. The trend towards increasing longevity means that the issue of retirement incomes is unavoidable. At some point during the next decade, a threshold is expected to be reached whereby there are three pensioners for every 10 working-age adults."

"The automatic enrolment system it proposed has been a success, with around 90% of eligible employees signing up since 2012, along with their employers. But millions of low-paid workers, as well as the vast majority of self-employed people, face an uncertain future unless they too are helped to plan and save. One suggestion, made by the Institute for Fiscal Studies (IFS) as part of its own pensions review, was that HM Revenue and Customs could oversee a system whereby self-employed taxpayers would be enabled to make pension contributions at the same time as paying their tax bill."

"Of the system's three pillars auto-enrolment, the state pension and voluntary individual saving the commission judges the last to be the weakest. One issue is whether people are saving enough to top up their state pension (currently 241.30 a week or 12,547.60 a year) to a level at which they will be satisfied with their income. Another is how these additional savings are managed. Since no one knows exactly how long they are going to live, or what their needs will be, decisions can be difficult even for financial experts."

"The report implies that changes made under the Conservatives and designed to boost pensioner freedoms were ill-advised. UK retirees have far greater flexibility than their peers in most countries, and those withdrawing lump sums are at risk of running down their savings too quickly. A rebalancing towards a more cautious default is likely to be among n"

An interim warning indicates that at least 15 million Britons are not saving enough for retirement. Increasing longevity is expected to raise the ratio of pensioners to working-age adults, making retirement income provision unavoidable. Automatic enrolment has been successful, with about 90% of eligible employees signing up since 2012, including employer participation. Millions of low-paid workers and most self-employed people still face uncertainty without similar help. A proposal would let self-employed taxpayers make pension contributions through HM Revenue and Customs alongside their tax payments. Voluntary individual saving is judged weakest, including whether people save enough to top up the state pension and how those savings are managed. Pensioner freedoms that boosted lump-sum withdrawals are implied to be ill-advised, with a shift toward more cautious defaults suggested.

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