Raft of pensions data paints a stark picture of UK's retirement preparedness

21 July 2025

If you are covering the data released by the government on future pension incomes, the gender pensions gap or planning and preparing for later life, please find below a comment from Jordan Clark, financial planner at Quilter:

“Today’s research underpinning the reinstatement of the Pensions Commission paints a stark picture of retirement preparedness in the UK. More than four in ten (43%) of working-age people are undersaving for retirement relative to their target replacement age – effectively the income required in retirement compared to current earnings. For many, transitioning into retirement with a similar quality of life is simply out of reach without drastic action being taken. This is even clearer when measured against the PLSA’s Retirement Living Standards. Currently just 13% are undersaving if the goal is to reach a ‘minimum’ level of living, as the state pension makes up most of this income. However, when it comes to a ‘moderate’ or ‘comfortable’ standard then these figures shoot up to 73% and 91% respectively, highlighting the parlous state of retirement finances in the UK.

“Our own figures show just how large a pension pot needs to be to help achieve these levels, with an individual needing £682,000 to get an annuity that when combined with the state pension will provide them with a comfortable standard of living. This falls to a still very high £415,000 for someone looking to achieve a moderate income. But today’s stats highlight that total incomes for individuals retiring in 2050 could be, on average, only 1% higher than those retiring in 2025. Private pension provision flagged as having the potential to be 8% lower for the same time periods as final salary pensions are consigned to history. These stats highlight the need for a real wake up call for savers and their pensions.

“The picture is even worse for women, however, who often are the ones left with caring responsibilities or breaks from work and thus their earning potential is hit. This has contributed to a gender pensions gap of 48%, with women having just £81,000 in pension wealth at the point where it can begin to be drawn upon, compared to £156,000 for men. Tackling this issue will require targeted reforms such as reviewing auto-enrolment thresholds, improving pension sharing on divorce and ensuring childcare support enables women to remain in the workforce. What this data doesn’t show, however, is that women typically live longer than men and often inherit a share of their partner’s pension wealth. While this may help offset some of the disparity, it also means women face longer retirements and greater financial pressures – making the need to close the gender pensions gap even more urgent.

“The problem facing retirees is a lack of resilience when it comes to pension adequacy. Further research from the government today suggests that 38% of 40- to 75-year-olds had no savings, while a further 20% had savings of under £15,000. Yet 60% of this age group in paid work said they wanted to work less as they approached retirement, giving them little ability to secure their finances ahead of what is a huge transition. Engagement in pensions and retirement income, however, is frighteningly low. The same research found that more than three-quarters (77%) of 40- to 75-year-old DC pension holders did not have a clear plan on how to access their pension. More than a fifth (21%) did not know they had to make a choice when they wanted to access their pension, highlighting that there is confusion amongst the wider population of the role of the state versus yourself when it comes to retirement income provision.

“Given the state pension on its own cannot achieve a minimum standard of living, the burden for saving for retirement is very much on individuals. Automatic enrolment has helped boost pension participation, but clearly there remains a gap in engagement and education levels – something that desperately needs addressing. People need to make sure they plan their finances before it is too late and give themselves enough time to rectify potential missed opportunities and mistakes from the past. Clearly there is a desire from people to glide smoothly into retirement, but without a pension pot set up to do this, it simply won’t be possible. Ultimately, today’s announcements from the government suggest state pension age rises are on the table, and without sensible reform to the triple lock then there may be no choice. The working-age population needs to be prepared to work later into life, with adequate private pension provision being the only route to avoiding this. There is a real need for bold and innovative solutions to the problems faced, and arguably speed is of the essence.”

For a single person, the required pension pot to meet the PLSA’s Retirement Living Standards are as follows:

For a couple, the joint pot sizes are: