Old age is supposed to be a time for rest and relaxation, but for many Brits, that may not end up being the case.
Millions of people across the UK could be heading towards pension poverty unless retirement saving improves, according to new research looking at how prepared people really are for later life. Rising living costs, weak pension contributions, and years of under-saving are all being blamed for the growing problem.
Experts say many workers still don’t fully understand how much money they’ll actually need once they stop working, which means retirement planning often gets pushed aside until it suddenly feels urgent.
Women and self-employed workers are among the groups most at risk.
Researchers say certain groups are far more likely to struggle financially in retirement than others. Women, self-employed workers, disabled people, renters, and people living alone are all seen as being at higher risk of pension poverty later in life.
Part of the problem is that many people in these groups either earn less overall, take career breaks, miss pension contributions, or simply don’t have the same level of employer support as full-time workers in stable jobs. Over decades, those gaps can become much bigger than people realise.
Many workers expect they’ll need to keep working beyond retirement age.
One of the more worrying findings is how many people now expect they may not actually be able to retire when they originally planned. Some workers believe they’ll need to continue working well into older age simply to cover basic living costs.
For many people, retirement no longer feels like a guaranteed stage of life where work finally stops. Instead, it’s becoming something that may involve part-time jobs, reduced hours, or continued work simply to stay financially stable.
Current workplace pension contributions may not be enough.
Experts say one major issue is that many workplace pensions simply aren’t growing quickly enough under the current system. While automatic enrolment has helped more people start saving, the minimum contribution levels are often still too low for a comfortable retirement.
A lot of workers assume that because they’re paying into a pension, everything will automatically work itself out later on. But financial experts say many people are still falling short of what they’ll realistically need in the future, especially with rising living costs.
Starting early can make a much bigger difference than people think.
One of the biggest recommendations from pension experts is simply starting as early as possible, even if the amounts saved seem small at first. The earlier someone begins saving, the longer their pension has to grow over time. Tax relief, employer contributions, and investment growth can all slowly build up over decades. Waiting until later in life often means people have to contribute far more money each month just to catch up.
Many people aren’t taking full advantage of employer contributions.
Some employers contribute more towards pensions than the legal minimum, while others will match additional payments workers choose to make themselves. Experts say many employees either don’t realise this or never properly check what their workplace offers.
In the long run, even slightly higher employer contributions can make a major difference to somebody’s retirement savings. It’s one of the few areas where people can potentially increase their pension without carrying the full financial burden alone.
Salary sacrifice schemes can help some workers save more.
Salary sacrifice allows workers to put part of their wages directly into their pension before tax and National Insurance are deducted. Financial experts say this can be one of the most efficient ways to increase retirement savings while also reducing some tax costs at the same time.
Not every workplace offers salary sacrifice, but where it’s available, it can help pension pots grow faster than many people expect. Even relatively small changes in contributions can build up significantly over a long working life.
Millions of pension pots have effectively gone missing.
Another major issue is the huge number of old pension pots people lose track of after changing jobs over the years. Researchers estimate millions of workplace pensions are sitting untouched, simply because people forgot about them or lost the paperwork.
Some of these forgotten pensions contain thousands of pounds. Experts say anyone who has worked across several employers should consider checking whether they have older pension accounts they no longer remember contributing to.
Checking your state pension forecast is more important than many realise.
The amount somebody receives through the state pension depends heavily on their National Insurance contribution record. Missing years can reduce payments later on if gaps aren’t corrected in time.
A lot of people only discover problems with their state pension record very close to retirement age, when fixing those gaps becomes much harder. Experts say checking forecasts early gives people far more time to sort out missing contributions if needed.
The government is under growing pressure to improve retirement outcomes.
The government is now reviewing parts of the pensions system as concerns around retirement poverty continue growing across the UK. Possible reforms being discussed include increasing minimum pension contributions and improving support for groups currently falling behind financially.
With millions of workers worried about whether they’ll ever have enough money to properly retire, pressure is likely to keep growing for changes that make long-term saving feel more realistic and achievable for ordinary households.
