Three-quarters of UK workers lack sufficient pension savings to support a moderate retirement lifestyle, according to a new report that sets a stark benchmark for financial security in later life.
The research defines a moderate retirement as requiring £32,700 annually for a single person and £45,400 for a couple. These figures represent a comfortable but not lavish standard of living, accounting for housing, utilities, food, healthcare, and leisure activities.
The report reveals a significant retirement readiness gap across the workforce. Most employees fall short of accumulating the assets needed to generate these income levels through pensions alone, forcing many to rely on state benefits, part-time work, or depleted savings during retirement.
Contributing factors include stagnant pension contributions among lower-income earners, inadequate auto-enrollment rates into workplace schemes, and the erosion of defined-benefit pensions in favor of less generous defined-contribution plans. Workers in precarious employment, freelancers, and those with interrupted careers face particular challenges building sufficient retirement capital.
The report underscores growing anxiety around pension adequacy. Inflation, rising life expectancy, and volatile investment markets compound the problem for savers. For workers already in their 50s and 60s, catching up becomes nearly impossible without dramatic increases to contributions or significant lifestyle adjustments in retirement.
Policy experts point to the need for higher mandatory pension contributions, extended working lives, and better financial literacy education. Without intervention, this report suggests a broad swathe of retirees will struggle to maintain living standards beyond the state pension threshold, amplifying reliance on means-tested benefits and widening inequality in older age.