DWP warns delay means UK households will miss out on £11,000 each

The Department for Work and Pensions has warned a delay means UK pension pot holders could miss out on £11,000. The DWP has delayed the second phase of a major review of the UK's retirement system under the new Labour Party government.

The review has been blocked amid concerns about its impact on businesses, which are already facing pressure from tax measures announced in October's Budget from Chancellor Rachel Reeves. The delay affects a crucial examination of the country's pension system that aimed to enhance retirement incomes for millions of workers.

The rule change would reportedly help the average earner who saves into such a scheme over their lifetime to finish with more than £11,000 extra in their pension pot on retirement. The review is being jointly conducted by pensions minister Emma Reynolds alongside the Treasury and the Department for Work and Pensions (DWP).

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A DWP spokesperson emphasised the government's commitment to supporting future pensioners through their "Plan for Change." The spokesperson confirmed that the first phase's interim report was published at the Mansion House event on November 14.

They added that the final report from the first phase will be published in spring. "Government will set out more details on the second phase in due course," the spokesperson said. Helen Morrissey, the head of retirement analysis at Hargreaves Lansdown, called the delay "disappointing" and stressed the urgency of addressing pension adequacy.

"We recognise that employers and households are under strain, but this review is just the first step and should set out a long-term timetable to boost savings," she said. Tom Selby, director of public policy at AJ Bell, described the issue as a "ticking time bomb" and "one of the most pressing issues facing society."

"The foundations of pensions are also shaky and delaying meaningful action to address these problems will leave millions of people at greater risk of an income shortfall when they reach retirement," Selby warned.