The Work and Pensions Select Committee has entered the third and final stage of its inquiry into the impact of financial freedoms and the protection of savers.
The first two looked at pension scams and how people make decisions on accessing their pension.
The third part of the inquiry will focus on “whether households have adequate pension saving for retirement”, it said and whether the government should intervene to improve to improve retirement outcomes.
Issues such as financial advice and guidance, income targets and auto-enrolment will be examined as well as what support is available for self-employed people and gig economy workers.
Stephen Timms, chair of the Work and Pensions Select Committee, said: “Making sure the right support and encouragement to save is in place from the very start of people’s working lives should be a key part of pensions policy if everyone is to benefit from a secure and comfortable retirement.
“Our inquiry will examine the impact on saving rates of both auto-enrolment and advice to savers and whether there are changes that could be made to boost the incomes of pensioners.
“With a rising number of people in precarious forms of work, the inquiry will also look at how self-employed people and those in the gig economy can be helped to save for their pensions to ensure they do not miss out later on in life.”
Minorities under the spotlight
Jon Greer, head of retirement policy at Quilter, believes that one task for the committee should be to look at social groups that are underrepresented when it comes to retirement savings, such as the self-employed, those from a Bame background or people with disabilities
“After assessing whether pension savers have the protections necessary to avoid pension scams, and having looked at how savers make decisions on accessing their pensions, the committee will now turn its attention to whether pension savers are contributing enough into their pensions, and whether further steps should be taken by the government to help people plan for retirement,” he said.
“We know that many in the UK are at risk of having inadequate savings to fund their desired lifestyle in retirement. This is particularly true of under-pensioned groups, who are less likely to have private pension savings to supplement their state pension and indeed may not have any private pension saving at all.
“Recent research from the Pensions Policy Institute (PPI) shows that only 36% of self-employed workers have any pension provision. Likewise, only 42% of people from Bame backgrounds and 50% of disabled individuals have any private pension savings.
“These groups are also those highly impacted by the pandemic. While the furlough scheme would have absorbed some of this financial impact, some people will still have made the decision to cease or reduce their pension contributions, or many well have changed jobs or become unemployed, which will disrupt contributions.
“It is the self-employed, in particular, that need close attention. With the rise of the gig economy and self-employment, more and more see it as a way of improving their quality of life. But this comes at a cost to pension security through lack of access to auto-enrolment schemes.”
