Ministers weigh raising auto-enrolment pension contributions to 12% under commission review

Baroness Jeannie Drake, chair of the second Pensions Commission, told a Pensions UK conference that raising the automatic enrolment contribution rate to a minimum of 12% is the clearest solution to the UK's pension crisis. One outlet default stands at 8%, including a 3% employer floor, and the commission is still working on measures to aid low earners and private renters. Think-tanks such as the Institute for Fiscal Studies and London Economics have modelled the impact, warning that a blanket rise could add about £9.8 billion in employer costs, and suggesting targeted or phased approaches to shield lower-paid staff.

Former pensions minister Guy Opperman said he would be pleased to see the 12% level reached by 2035 but noted that any change would likely be delayed until after the next general election. Proposals also include removing the £6,240 earnings threshold so contributions apply from the first pound earned. The Department for Work and Pensions confirmed the commission will publish its final recommendations in early 2027.