About 15 million people in the UK are not saving enough for their retirement, according to a report by the Pensions Commission. The independent group of experts warned the figure could rise to 19 million without urgent action. The problem is particularly acute for women, with female savers approaching retirement having private pension pots on average half the size of those held by their male counterparts. Women had a median pension wealth of £81,000, versus £156,000 for men.
Workers struggle to save amid cost of living crisis
Sarah, a 35-year-old library worker from Oxford, has saved only £5,000 into her pension despite working full-time and part-time. She has not opted into her workplace pension scheme due to the cost of living. “I live alone in a small flat where my rent and essential bills come to £1,500 per month and my full-time salary is £1,880,” she said. Her part-time job brings in an extra £500 a month, but she cannot afford to save more. “I haven’t been on holiday in years. I don’t have a car. I don’t go out. So I’m not choosing lifestyle over saving,” she added.
Danny, a 54-year-old freelance graphic designer from London, has been unable to save into a pension and is still repaying a £30,000 bounce-back loan from the pandemic. “Every time I have saved, something falls over and the savings diminish,” he said. As a single father of two, he finds his financial future “frankly terrifying”. He said, “I don’t think I’ll ever be in a place where I can retire.”
Only a fraction of workers on track for moderate retirement
According to the Pensions Commission, 45% of working-age adults in the UK are not saving into a pension. Only 4% of self-employed workers are saving for retirement, and about 30% of private pension pots were accessed at the earliest possible opportunity. The trade body Pensions UK has estimated that just 23% of the working population are on track to reach a “moderate” lifestyle of £32,700 a year for one person when they retire.
Kevin, 64, a digital user experience designer from Yorkshire, has saved £58,000 into his workplace pension and owns a house, but worries it won’t stretch far. “I don’t quite know how the bills are going to stack up, without turning the heating off in winter,” he said. He plans to retrain as a part-time therapist to supplement his income.
Martin, from Marlborough in Wiltshire, has saved £39,000 since 2017 as a content editor. He lives with his mother and supports a child. “The world economy is so unpredictable. You don’t know where the market is going to be,” he said.
