Guarantee the perpetuity of the state pension without the triple lock mechanism and the promise to maintain it irrespective of the individual's income level.
The Institute for Fiscal Studies (IFS) has proposed a series of comprehensive reforms to address major challenges in the UK pension system, aiming to create a more secure, equitable, and sustainable pension system for future generations. The IFS's Pensions Review, published in 2025, outlines a clear roadmap that focuses on establishing a stable state pension target, widening auto-enrolment, boosting pension contributions, providing targeted support, and offering solutions to help individuals manage their pension wealth in retirement.
The key proposals include fixing the state pension as a stable fraction of economy-wide average earnings, with the government using the existing triple lock mechanism temporarily to reach the target, and then abolishing the triple lock. The full new state pension would continue to be paid regardless of other income or assets, preserving its role as a guaranteed base income in retirement.
To ensure a stronger private saving culture, the IFS recommends widening the scope of auto-enrolment so that all employees aged 16 to 74 are enrolled in a workplace pension scheme. This move is expected to boost private pension saving by an estimated £11 billion per year. To help workers save more effectively for retirement, the IFS suggests increasing pension contributions from both employers and employees.
The IFS also acknowledges the need to help those most affected by rises in the state pension age and others at high risk of poverty in old age. Proposed solutions include providing targeted support, such as a new mechanism to facilitate pension saving by the self-employed, and boosting Universal Credit for people within one year of their state pension age.
In addition, the IFS proposes measures to help individuals manage their pension wealth in retirement, addressing the complexity of decisions on how to draw on and invest pension funds once retired. The report's findings have been praised by pension experts for their emphasis on workplace pension schemes, the employer-employee partnership, and targeted support for those saving for retirement.
David Gauke, former secretary of state for work and pensions, who chairs the steering group of the Pensions Review, believes the recommendations maintain an important balance. The IFS's final report comes at a time when the government is expected to commence its own review, and the proposals are expected to influence the government's future pension policy decisions.
| Proposal | Description | |-----------------------------------|--------------------------------------------------------------------------------------------------| | State pension target | Fix pension as % of average earnings, use triple lock to reach target, then scrap triple lock | | No means-testing | Guarantee full-state pension regardless of income/assets | | Auto-enrolment expansion | Include all employees aged 16-74 in pension saving schemes | | Boost pension contributions | Increase employer and employee contributions | | Targeted support | Help those hit hardest by pension age rises and poverty risks | | Retirement wealth management | Provide better tools and advice to manage pensions through retirement |
These reforms aim to help ensure future pensioners have a secure retirement income, with a stronger private saving culture and a more financially sustainable state pension system. The IFS's overhaul also addresses the risk of complacency in pensions policy, providing a clear and affordable roadmap for the government.
- The Institute for Fiscal Studies (IFS) proposes fixing the state pension as a stable fraction of economy-wide average earnings, which would be achieved temporarily using the triple lock mechanism, followed by its abolition.
- To encourage a stronger private savings culture, the IFS recommends expanding auto-enrolment to include all employees aged 16 to 74, a move expected to boost private pension savings by approximately £11 billion per year.
- Recognizing the need for targeted support, the IFS proposes measures such as a new mechanism to facilitate pension saving for the self-employed and boosting Universal Credit for those within a year of their state pension age, to help those most affected by rises in the state pension age and those at high risk of poverty in old age.
