The Standard Life Centre for the Future of Retirement has called for changes to automatic enrolment that would see minimum pension contributions calculated from the first pound earned rather than on earnings above the Lower Earnings Limit.
The UK think tank warned the savings levels of many people mean they are unlikely to enjoy the retirement they expect, with lower earners, self-employed workers, and women the most likely to feel the current system is not working for them.
The Standard Life Centre for the Future of Retirement’s 2026 Standard Life Retirement Voice report found 42% of people yet to retire expect their standard of living to worsen in retirement, up from 33% in 2024.
At 63% the majority of people are worried they are not saving enough for retirement, and 45% expect their standard of living in retirement to be worse than their parents’, up from 39% in 2025 and 33% in 2024.
However, millions of people could have better retirement prospects if the UK takes the next step in reforming automatic enrolment, the think tank said.
Standard Life modelled a worker’s pension savings from the age of 22 on a salary of £18,000, with pay rising in line with inflation and contributions at the current minimum auto-enrolment level of 8% in total, made up of 3% employer and 5% employee contributions.
Under the current qualifying earnings basis, where minimum pension contributions are calculated only on earnings above the Lower Earnings Limit, that worker could build a pension pot worth around £83,000 by age 68, in today’s prices. But if contributions were calculated from the first pound earned, the same worker could build a pot worth around £113,0001, Standard Life said.
Catherine Foot, director of the Standard Life Centre for the Future of Retirement, said: “The Pensions Commission has an important opportunity to consider how automatic enrolment can build on its strong foundations and better support a system that is adequate, fair and sustainable over the long term.
“Auto-enrolment has been one of the great pension policy successes of recent decades, but the challenge now is whether it enables people to save enough, early enough, and in a way that reflects different employment patterns and income levels.
“Lower starting ages, contributions from the first pound earned and support for those currently outside or on the edges of automatic enrolment could make a meaningful difference, particularly for lower-paid workers and people with multiple jobs.”
Foot caveated that reform must be carefully designed to take into account the timing, sequencing and sharing of any future increases in contributions and the impact on employers and lower earners’ take-home pay.
She added: “The Commission’s recommendations should therefore set out a clear and gradual path for change, while also considering how the system can evolve to better support self-employed workers, who face a different challenge because they do not benefit from automatic enrolment.”
