Three-quarters of UK workers are not on track to achieve a moderate income in retirement, according to a new report, raising fears of a widespread pension shortfall.
The findings, published by the Pensions and Lifetime Savings Association (PLSA), suggest that a moderate lifestyle in retirement now costs £32,700 a year for a single person and £45,400 for a couple. Yet only 25% of savers are expected to reach that level. The picture is even starker for those hoping for a comfortable retirement: just 9% are on course to achieve it, which requires an annual income of £43,100 for a single person or £59,000 for a couple.
“Three-quarters of UK workers are not on track for a moderate retirement income, with only 9% on course for a comfortable lifestyle, according to a new report by the Pensions and Lifetime Savings Association.”
At the other end of the scale, the minimum income needed for a basic retirement — covering essentials like housing, food and heating — stands at £13,900 a year for a single person and £21,500 for a couple. The PLSA warned that millions of savers face a “cliff edge” when they stop work, with many relying solely on the state pension, which currently provides up to £11,500 a year for a full new state pension.
The report highlights a growing gap between what people are saving and what they will need. The figures are based on the PLSA’s latest Retirement Living Standards, which are updated annually to reflect changes in the cost of living. The association said the rising costs of essentials, such as energy and food, have pushed up the amount needed for each lifestyle level.
While the data covers the whole of the UK, regional variations in housing costs and living expenses mean the sums needed may differ slightly across England, Scotland, Wales and Northern Ireland. However, the PLSA said the national benchmarks provide a useful guide for savers everywhere.
Nigel Peaple, director of policy and advocacy at the PLSA, said: “Our research shows that people need to be saving more for the retirement they want. The new standards show the cost of a moderate retirement has risen, and for many, auto-enrolment alone won’t be enough.”
The government has recently announced plans to extend auto-enrolment to younger workers and to allow employees to save from the first pound of earnings, rather than from a threshold. But these changes are not expected to come into force until the mid-2020s at the earliest. In the meantime, the PLSA is urging savers to check their pension pots and consider increasing contributions where possible.
## What This Means For You - Homeowners: If you own your home outright, you may need less income for housing costs, but still face rising bills and maintenance. The moderate retirement figure assumes spending on housing, food, transport and leisure. - Renters: Rent in retirement can significantly increase the income you need. Those still paying rent may need to aim above the moderate benchmark. - Workers: If you are not saving enough through your workplace pension, consider increasing contributions or setting up a separate pension. Auto-enrolment minimums (8% of earnings) are unlikely to deliver a comfortable retirement. - Pensioners: Those already retired should check they are claiming all benefits they are entitled to, such as pension credit, which can top up income. - Younger savers: Starting to save earlier means your money has longer to grow. Even small increases in contributions now can make a big difference later.