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Retirement savings gap leaves millions at risk
Over three-quarters of UK workers are not on track to save enough for a moderate retirement lifestyle, risking a sudden income drop when they stop working, a pensions industry report has revealed.
Cost of retirement rises amid inflation
Pensions UK's latest analysis estimates a single person now needs £32,700 annually for a moderate retirement, while couples require £45,400. However, only 23% of the working population is projected to reach this level.
A minimum standard of living costs £13,900 for individuals and £22,500 for couples, with 82% of workers expected to meet this threshold. Meanwhile, a comfortable retirement-£45,400 for singles and £62,700 for couples-is achievable for just 9% of savers.
Public expectations out of sync with reality
The figures, calculated by Loughborough University's Centre for Research in Social Policy, reflect rising living costs, particularly for food and social activities. Housing expenses are excluded from the estimates, meaning individuals must adjust for personal circumstances.
"Without action, too many risk facing a cliff-edge drop in income when they stop work. This is out of step with what people expect for their future."
Zoe Alexander, Pensions UK
Calls for urgent reforms
The report urges workers, employers, and the government to boost retirement savings. Pension providers already send annual statements projecting future income, but the findings highlight a growing shortfall.
The government has revived the Turner Pension Commission, which previously led to automatic pension enrolment in 2006. An interim report warns that future retirees could be £800 worse off annually-an 8% decline compared to today's pensioners.
Gender gap worsens savings crisis
Women face a steeper challenge, with pension savings roughly half those of men, according to tax authority data. Investment platform AJ Bell found women begin falling behind at age 28, compounding the retirement savings gap.
What's next?
The government's pension commission is expected to propose further reforms to address the savings shortfall. Meanwhile, individuals are advised to review their retirement plans in light of rising costs.
