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Challenges for the private pension system in the UK and policy proposals to address them

Author

Listed:
  • Cribb, Jonathan
  • Karjalainen, Heidi
  • O’Brien, Laurence

Abstract

We identify key challenges and develop policy proposals for the UK private pension system, which is increasingly reliant on defined contribution plans. The key challenges are: a significant share of employees, and the vast majority of self-employed workers, are not saving in a private pension; even among savers, low contribution rates mean many are on track for inadequate retirement incomes; and people face complex decumulation decisions, where few take financial advice or buy annuities. We propose: increases in default contribution rates which rise faster as people earn more; a minimum employer pension contribution irrespective of whether employees contribute; facilitation of private pension saving for self-employed workers; and people should be guided towards partial annuitisation later in retirement to provide some longevity insurance.

Suggested Citation

  • Cribb, Jonathan & Karjalainen, Heidi & O’Brien, Laurence, 2026. "Challenges for the private pension system in the UK and policy proposals to address them," The Journal of the Economics of Ageing, Elsevier, vol. 34(C).
    • Handle: RePEc:eee:joecag:v:34:y:2026:i:c:s2212828x26000204
    DOI: 10.1016/j.jeoa.2026.100637
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    Keywords

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    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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