Two-fifths (39%) of UK adults are not on track for a minimum lifestyle in retirement, worsening from 35% in 2023, according to research by Scottish Widows.
The financial services group surveyed 5,167 UK adults for its latest Retirement report, which highlighted that retirement outlooks have worsened since 2023, with 1.6 million more people risking retirement poverty.
Although pension saving levels have increased in the last 12 months, with projected retirement income rising to £17,200 from £15,500, 50% know they are not saving enough for retirement. While 69% feel financially independent, a quarter do not. Two-fifths (44%) do not believe they will ever achieve financial independence.
A quarter (25%) of those in their 20s prioritise saving for emergency expenses, with their main savings goals also including house deposits and holidays, while 13% cannot save at all.
Of those who earn between £20,000 and £35,000 and are aged in their 30s, 46% are mostly likely to contribute the minimum 8%. This group faces a 60% retirement income drop on average, with 70% seeing their income halved. A total of 60% of those in their 30s know they are not saving enough, and 30% do not save.
Pete Glancy, head of pensions policy at Scottish Widows, said: “Our research couldn’t be more timely, spelling out just how crucial targeted measures are in preventing millions from living in retirement poverty in the coming years. The second phase of the government’s Pensions Review must be broad enough to take a holistic view on people’s financial journey through life considering wide-ranging financial goals. There are three key areas that must be addressed urgently: auto-enrolment, self-employed contribution rates and housing.
“For now, the challenge is helping people make the most of what they have. It is essential to ensure people feel financially empowered to make informed decisions and take proactive steps for their future, with a strong sense of financial independence playing a key role.”
Paul Leandro, partner at Barnett Waddingham, added: “Pension saving levels are increasing, but it’s still not touching the sides. The rising cost of living, persistently low contribution rates, and growing apathy means millions of future retirees still aren’t on track to achieve an adequate income in retirement.
“Year in, year out, the inadequacy of pension contributions is a concern we see, and without clear, decisive action for change, the ticking timebomb of the UK’s pension system could soon blow up in our faces. The new pensions minister’s commitment to addressing retirement adequacy is a welcome message, but the devil will now be in the detail.”
