The Institute and Faculty of Actuaries (IFoA) has called for major reforms to the UK pension system after new research found that modern working patterns are leaving millions at risk of financial insecurity in retirement.
The report, ‘A pension system fit for the 21st century – the stories behind pension gaps’, was produced with Ipsos and draws on filmed research and interviews with people affected by gaps in pension savings.
It highlights the struggles of self-employed workers, part-time staff and those whose careers are disrupted by life events such as parental leave or illness.
The findings show that the current system, designed around long, uninterrupted careers with a single employer, disadvantages growing sections of the workforce.
For example, while self-employed people account for 14% of the UK workforce, only 18% are saving for retirement, compared with 90% of employees.
The research builds on the IFoA’s earlier work, launched in September 2024, which examined the barriers people face when saving for retirement.
This second phase focuses on the personal experiences behind the data and argues that pension gaps are often the result of systemic design, rather than individual choice.
The report recommends a series of measures aimed at government, industry and consumer representatives, including:
- Introducing flexible auto-enrolment schemes for the self-employed;
- Creating UK Child Saver accounts to build a culture of saving from birth;
- Encouraging proactive communication from employers and providers about the pension impact of life events such as reduced hours or parental leave;
- Exploring supplementary, community-based pension models;
- Launching a national pensions literacy strategy to improve confidence and engagement.
The research found that many participants were more familiar with their banks than with their pension providers, highlighting low visibility and limited connection with pensions.
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Alexandra Miles, chair of the IFoA Pensions Gap working party, said the current system no longer reflects the realities of modern work.
“The current pensions system was a fantastic invention of a different era. Increasing numbers of modern working lives are fragmented, diverse, and uncertain,” she said.
“They no longer fit the mould of a long, uninterrupted career with one employer.
“This report shows that pension gaps are often not caused by individual choices alone – they are embedded in systemic design.
“Through our collaboration with Ipsos, we have heard stories of freelancers who fear poverty in later life, parents forced to choose between pension savings and rent, and part-time workers whose retirement security is halved by a simple contract change.”
She urged urgent and practical action to adapt the system so that it remains “fit for the 21st century – and one that supports dignity, security and purpose for everyone”.
UK pensions minister Torsten Bell welcomed the report, saying: “This report makes an important contribution to debates about how we reform the pensions system to ensure more people can look forward to a secure retirement.
“We have revived the Pensions Commission to put Britain back on track for a stronger and fairer pensions system.”
IFoA president Paul Sweeting said the work showed how actuaries could help shape policy in the public interest.
“Working lives today look different compared to when the current pensions system was first developed,” he said.
“It is incumbent on all of us – industry, government and consumer representatives – to make sure that we have a pensions system that provides financial security for all in retirement.”
Lucy Neiland, business anthropologist at Ipsos, said the filmed research provided valuable insight into the lived experiences of workers.
“By deep diving into the experiences of freelancers, self-employed and part-time workers, we’ve uncovered some of the cultural norms and nuanced realities that underpin pension gaps today,” she said.
“This collaborative effort with the IFoA not only challenges conventional assumptions but also sets a stage for meaningful transformation.”
