More than 12 million UK adults are at risk of being unable to cover their basic financial needs in retirement, according to a new report from Scottish Widows. The analysis estimates that 12.2 million people are not on track to meet even the minimum required income for later life.
However, this marks an improvement on the previous year, when 15.3 million were in the same position. The report attributes the shift to factors such as pay rises, increased non-pension savings, higher homeownership rates, and a reduction in energy costs lowering the benchmark for household living expenses.
Researchers caution that progress could be quickly reversed as global events push energy prices higher again. The forecast, based on a survey of around 6,000 people aged 22 to 65, uses retirement living standards from Pensions UK to project outcomes based on savings, behaviours, and income sources.
Certain groups are particularly vulnerable. Fewer than one in five full-time employees face pension poverty, compared to over a third of part-time or self-employed workers. Half of those with physical or mental health conditions affecting daily life are also at risk.
Pete Glancy, head of pension policy at Scottish Widows, said: 'This report paints a complex picture. The factors we can control, like how much we save, may improve, but can easily be thrown off course by shifting external factors like increases to energy and general cost of living.'
Scottish Widows recommends increasing automatic enrolment contributions from 8% to 12% and creating a similar system for the self-employed. Helen McGinty of Skipton Building Society added: 'The earlier you start planning, the more options and flexibility you’ll have later on.'
