Contemporary Social Science

The Future of Pensions in an Ageing Society

Like many OECD countries, the UK is experiencing population ageing. The number of people above pensionable age is projected to rise from 12.4 million in 2024 to 15.3 million by 2049, while the old-age dependency ratio (OADR) is expected to increase from 280 to 329 over the same period (ONS, 2026a). Although the UK's OADR is projected to be below the OECD average in the longer term (OECD, 2025), demographic change will continue to place significant pressure on state pensions, health and social care services, and require more of workplace pension provision to ensure adequate incomes in retirement.

The UK State Pension has undergone substantial reform. The most significant recent change was the introduction of the new State Pension (nSP) following recommendations from the Pensions Commission [2002-2006]. The nSP provides a single flat-rate payment to individuals with a full National Insurance contribution record (35 years). Around two-fifths of pensioners currently receive the nSP, and all pensioners are expected to do so by around 2050 (DWP, 2026a). The nSP reform has led to greater coverage (of the full rate) and simplicity and fairness than its pre-2016 system, with more equal state pension outcomes between men and women. Alongside this, the State Pension age (SPa) has been equalised between men and women and is rising, with the latest increase to age 67 taking place between 2026 and 2028.

The key challenge is maintaining the achievements of the nSP while ensuring its long-term sustainability. State Pension expenditure exceeded £136 billion in 2024/25 and, together with pensioner benefits, represented around 6% of GDP. This is projected to rise to around 9% by the early 2070s (OBR, 2025), driven by both population ageing and the current uprating mechanism, the Triple Lock. Raising the SPa is one response to constrain these increases, but slower life expectancy growth, labour market inequalities and variations in health suggest that future increases require careful consideration. The other main option is reform to uprating. However, because the State Pension remains a major source of retirement income, any reduction in its generosity would likely need to be offset by stronger workplace pension provision if increased poverty and inadequate incomes among future retirees are to be avoided.

Progress has been made in significantly reducing pensioner poverty; relative pensioner poverty (after housing costs) fell from over 40% in the mid-1990s to 14% by 2009/10, largely due to Pension Credit. In 2024/25, relative pensioner poverty was 14%, equating to 1.7 million pensioners (DWP, 2026b). However, evidence suggests growing numbers of pensioners living below a minimum income standard (see Robinson et.al, 2026). Poverty rates remain particularly high among social and private renters, highlighting the importance of housing tenure for retirement outcomes (DWP, 2026b). Poverty among older working-age adults also raises concerns about individuals entering retirement from already precarious financial positions. Those reaching retirement soon may face specific challenges because they spent much of their working lives before automatic enrolment (AE) was introduced and may have accumulated limited private pension savings.

Workplace pensions have also been transformed over the past two decades. The late 1990s and 2000s saw large declines in Defined Benefit pension provision, whilst the introduction of Automatic Enrolment from 2012 saw Defined Contribution pension participation increase dramatically (Cribb et. al, 2023). Today, around 90% of AE eligible employees participate in pension saving, representing 22.6 million people (DWP, 2026c).

Despite this success, challenges remain. Contribution levels are relatively low by international standards (OECD, 2025), and minimum contributions are most common among low earners. (DWP, 2025) Pension participation also varies by gender, ethnicity and employer characteristics (DWP, 2026c). Moreover, significant groups remain outside the system. This includes the self-employed, whose pension participation has fallen at the same time as there has been growth in the numbers of self-employed people (Karjalainen, 2023). As a result, many future retirees may still rely heavily on the State Pension. Increasing contributions could improve retirement outcomes, but policymakers must balance future adequacy against current affordability for employers and workers.

AE has succeeded partly because it relies on behavioural inertia with individuals opt-ed into the system by default, with opt-out available. Opt-out rates have remained significantly below initial expectations (see DWP 2026c, NAO, 2015). However, pension policy has evolved since AE was introduced. Pension Freedoms, introduced in 2015, gave retirees greater flexibility in accessing their pension savings, replacing the previous assumption that most would purchase annuities. While this expanded individual choice, it also increased responsibility for decision-making. Evidence indicates that many people have limited understanding of retirement income options and often underestimate their likely life expectancy (see, FCA, 2025; Standard Life, 2026). Retirement decisions are not often taken in isolation. Individuals may face difficult choices about whether to continue working and/or draw pension income early, sometimes when there are changes in the health and care needs of their own or their family members, with different consequential outcomes later in retirement (DWP, 2026d).   Recent policy initiatives, including Guided Retirement and Targeted Support measures, seek to address these challenges. Collective Defined Contribution pensions have also attracted growing interest as a potential mechanism for sharing risk more effectively as contributions are pooled, sharing investment and longevity risks (PPI, 2025).

The UK pensions system now manages assets exceeding £2 trillion (ONS, 2026b). Consequently, pension investment decisions have implications beyond retirement incomes, including their potential contribution to economic growth. However, evidence suggests that UK pension providers have increasingly invested outside the UK (DWP, 2024). Policymakers therefore face the challenge of balancing the objective of achieving the best outcomes for savers with broader ambitions to support domestic investment and growth, and maintaining an efficient and well-regulated pensions industry that best supports these aims.

Many of these issues are currently under review. The second Pensions Commission, due to report in 2027, is examining long-term questions of pension adequacy and retirement outcomes. Meanwhile, the Pensions Schemes Act (2026) includes reforms intended to improve pension schemes and outcomes for savers. Nevertheless, demographic, economic and labour market change means that pension systems will require ongoing adaptation based on emerging evidence.

This Special Collection welcomes papers dealing with these issues and related research on pensions and pensions provision in an ageing society. We are particularly interested in papers that address the following (non-exhaustive) topics:

• Employment, unemployment and inactivity trends among older workers – including differences by place and characteristics, the interaction with health and caring - and the implications for their retirement outcomes. Strategies for addressing these issues, from employers, third sector and governments.
• Working beyond State Pension age, including trends, motivations and consequences.
• International comparisons of State Pension age reforms, fiscal sustainability and intergenerational fairness.
• The role of Pension Credit, Housing Benefit and other pensioner benefits in preventing poverty now and in the future.
• Housing and retirement – trends in future pensioner home ownership, private and social renting, and the consequential impacts on pension incomes, expenditure (including in relation to social care) and future inheritance
• Automatic enrolment in comparative perspective and opportunities to improve pension accumulation and decumulation for low and middle earners.
• Pension saving among the self-employed and alternative retirement-saving mechanisms.
• Inequalities – including gender, ethnic, occupational and employer-size - within Defined Contribution pension systems.
• The role of Collective Defined Contribution schemes in the UK and elsewhere
• Awareness and attitudes towards pension saving, financial decision-making and understanding of decumulation options amongst different employees and self-employed people.
• Trends and considerations for the pensions industry - mega-funds, investment in the UK’s macro-economy, systemic risk and prudential regulation, the role of open Defined Benefit pensions, the future of regulation.
• The role of pensions within wider economic ‘growth regimes’ across OECD countries.
• The political economy of pension reform and the factors influencing successful policy change.

References

Cribb, J., Emmerson, C., Johnson, P, Karjalainen, H. and O’Brien, L. (2023) Challenges for the UK pension system: the case for a pensions review. IFS Report 255 https://ifs.org.uk/sites/default/files/2023-04/Challenges-for-the-UK-pension-system-IFS-Report-R255.pdf

DWP (2024) Pension fund investment and the UK economy https://www.gov.uk/government/publications/pension-fund-investment-and-the-uk-economy/pension-fund-investment-and-the-uk-economy

DWP (2026a) Households below average income: for financial years ending 1995 to 2025 https://www.gov.uk/government/collections/households-below-average-income-hbai--2#latest-release

DWP (2026b) Annual DWP Benefit Statistics Compendium: 2026 https://www.gov.uk/government/statistics/annual-dwp-benefits-statistics-compendium-2026/annual-dwp-benefits-statistics-compendium-2026

DWP (2026c) Workplace pension participation and savings trends: 2009 to 2025 https://www.gov.uk/government/statistics/workplace-pension-participation-and-savings-trends-2009-to-2025

DWP (2026d) Pension Decumulation & Decision-making https://assets.publishing.service.gov.uk/media/6a50e0eac3d64d94cacab77b/pension_decumulation_and_decision_making.pdf

Financial Conduct Authority (2025), Financial Lives Survey 2024 – Pensions

https://www.fca.org.uk/publication/financial-lives/fls-2024-pensions.pdf

Karjalainen, H. (2023) Trends in pension saving among the long-term self-employed. IFS Report R249  https://ifs.org.uk/sites/default/files/2025-04/IFS-R249-Trends-in-pension-saving-among-the-long-term-self-employed_1.pdf

National Audit Office (NAO) (2015) Automatic enrolment to workplace pensions. https://www.nao.org.uk/wp-content/uploads/2015/11/Automatic-enrolment-to-workplace-pensions.pdf

Office for Budget Responsibility (2025), Fiscal risks and sustainability https://obr.uk/frs/fiscal-risks-and-sustainability-july-2025/

Office for National Statistics (ONS), (2026a) released 28 April 2026, ONS website, statistical bulletin, National population projections: 2024-based

Office for National Statistics (ONS), (2026b) released 2 April 2026, ONS website, statistical bulletin, Funded occupational pension schemes in the UK: April to September 2025

OECD (2025), Pensions at a Glance 2025: OECD and G20 Indicators, OECD Publishing, Paris, https://doi.org/10.1787/e40274c1-en

PPI (2025) Collective Pensions with Investment Choice: Making CDC work for the UK https://www.pensionspolicyinstitute.org.uk/media/g2sp5fpp/20251106-collective-pensions-with-investment-choice-ppi-kcl-nuffield.pdf

Robinson, E. Stone, J. and Padley, M. (2026) Households living below a Minimum Income Standard: 2008–2024. York: Joseph Rowntree Foundation

Standard Life (2026) 8 in 10 over-50s underestimate life expectancy, putting retirement plans at risk, Press Release https://www.standardlifeplc.com/news-and-views/press-releases/article-page/8-in-10-over-50s-underestimate-life-expectancy