Millions of UK workers are facing the prospect of inadequate retirement savings. But experts argue that a pension system overhaul could significantly change the picture.
According to Scottish Widows’ Retirement Report (September 2025), reforms such as lowering the auto-enrolment age to 18 and removing the earnings threshold could help the average worker accumulate an additional £46,000 by retirement.
With only 39% of Britons currently on track for a comfortable retirement, these proposals are seen as critical steps to ensure financial security for future generations.
Current Auto-Enrolment Rules
Under the existing pension system:
- Age threshold: Employees aged 22 and over are automatically enrolled.
- Earnings threshold: Workers must earn at least £10,000 annually to qualify.
- Contribution rate: Minimum of 8% of gross salary, shared between employee and employer.
This system has encouraged millions to save, but critics argue it excludes younger and lower-earning workers who could benefit most from early savings.
Proposed Pension Reforms
Scottish Widows and industry experts have called for urgent reforms to make pensions more inclusive.
Key Changes in Discussion
| Reform Proposal | Impact on Savings |
|---|---|
| Lower auto-enrolment age from 22 to 18 | Gives workers a head start, adding £46,000 over a lifetime |
| Remove earnings threshold (£10,000) | Includes part-time and low-income workers in pension saving |
| Gradually increase contributions to 12% | Ensures long-term adequacy of retirement income |
| Encourage salary sacrifice (salary exchange) | Could add £463 per year in extra pension savings |
| Pension pot consolidation tools | Helps savers track and combine pots across jobs |
These measures are designed to close the retirement gap and ensure more workers benefit from compound growth over decades.
Expert Views
Retirement expert Robert Cochran highlights that starting early is crucial:
“Lowering the entry age to 18 and removing the earnings limit could boost a young worker’s future retirement pot by £46,000.”
Former pensions minister Steve Webb warned that delays in reform risk leaving millions without enough savings:
“With every passing year, time is running out for workers to build up a decent retirement income.”
Industry leaders also criticised Chancellor Rachel Reeves for not addressing auto-enrolment reforms in her July Mansion House speech, calling it a “missed opportunity.”
Why It Matters
- 39% of UK workers are on track for adequate retirement savings.
- 61% risk financial shortfalls later in life.
- A quarter of adults admit they don’t fully understand how pensions work.
By starting earlier and saving more consistently, workers can benefit from:
- Employer contributions
- Government top-ups via tax relief
- Compounding growth across decades
Tools and Resources for Savers
To help workers manage their pensions more effectively, providers have launched new tools:
- Ready-Made Pension Tool – integrates with Lloyds, Halifax, and Bank of Scotland apps.
- #PensionMirror Platform – launched during Pension Engagement Season to raise awareness.
- SAVE Guide – Scottish Widows’ four-step approach:
- Sit down and plan
- Auto-enrol and increase contributions
- Value your pension pots
- Enhance through salary sacrifice
The call for a pension system overhaul in 2025 highlights the urgent need to strengthen retirement savings in the UK. By lowering the auto-enrolment age to 18, removing earnings barriers, and encouraging higher contributions, workers could see their retirement pots boosted by as much as £46,000.
For individuals, the message is clear: start early, stay enrolled, and maximise contributions. With reforms and better engagement, Britain could close its looming pension gap and ensure future retirees enjoy financial security.
FAQs
How much extra could young workers save under the proposed pension reforms?
Up to £46,000 more by retirement, if auto-enrolment begins at 18 instead of 22.
Who benefits most from scrapping the £10,000 earnings threshold?
Part-time workers, younger employees, and those with multiple low-income jobs.
Will pension contributions rise above 8%?
Experts recommend gradually raising contributions to 12% to ensure adequate retirement income.