New Research Reveals Critical Pension Adequacy Gap: What Financial Advisers Need to Know

Major workplace pensions study uncovers opportunities for advisers to address retirement income shortfalls affecting 15 million UK workers

November 2025 – New research from Royal London highlights a growing disconnect between employees’ retirement expectations and their actual pension savings, creating significant advice opportunities for financial advisers.

The comprehensive study of 4,000 UK employees with pensions reveals that nearly 15 million working-age people are not on track for an adequate retirement income, despite automatic enrolment transforming workplace pension participation since 2012.

Key Findings for Financial Advisers

The Adequacy Challenge

Government analysis shows that someone retiring in 2050 will have a private pension income 8% lower than someone retiring in 2025, creating an urgent need for proactive financial planning advice.

The research identifies several critical gaps that advisers can address:

• 46% of employees contribute less than 4% of salary to their workplace pension, below the automatic enrolment minimum when accounting for tax relief
• Average employee contribution is just 4.8%, significantly below levels needed for adequate retirement income
• Women contribute an average of 4.5% compared to 5% for men, exacerbating the existing gender pension gap

Untapped Employer Matching Opportunities

One of the most striking findings concerns employer pension contribution matching – where employers match additional voluntary contributions pound-for-pound up to a limit.

• 38% of employees with workplace pensions use employer matching – a powerful benefit that effectively doubles pension contributions at no additional cost to the employer
• 14% are offered matching but don’t use it, representing immediate advice opportunities
• 22% don’t know whether their employer offers matching, highlighting a communication gap that advisers can bridge

Employees using employer matching are significantly more likely to expect a comfortable retirement (38% vs 34% for those whose employer doesn’t offer it), demonstrating the tangible impact of this benefit.

Understanding Employee Engagement Patterns

Who’s Checking Their Pension?

The research reveals distinct engagement patterns that can inform client segmentation strategies:

Positive trends:

• 72% of workplace pension holders check their pension savings at least annually
• 52% check more frequently than once per year
• Only 10% never check, down from 13% in 2024

Demographic variations:

• Men check almost twice as often as women (17% weekly vs 10% for women)
• Higher earners monitor more frequently – 92% of those earning £100,000-£149,999 check annually vs 71% earning £40,000-£49,999
• Younger employees are more proactive, though older workers show higher engagement with pension forecasts

The Forecast Gap

Understanding retirement projections is crucial, yet 30% of employees have never checked their workplace pension forecast. This varies significantly by income:

• 38% of those earning £10,000-£19,999 have never checked their forecast
• Only 16% earning £100,000-£149,999 have never done so

This presents clear opportunities for advisers to add value through client education and engagement strategies.

Retirement Living Standards: The Awareness Problem

The Retirement Living Standards, developed by Pensions UK following independent research by Loughborough University, provide a framework for understanding retirement costs. However, awareness remains troublingly low:

• 37% have never heard of the standards
• 33% have heard of them but don’t understand what they represent
• Only 31% understand what the standards mean

The Three Living Standards

Minimum (one person: £13,400 | couple: £21,600)

• Covers essentials with limited flexibility
• Occasional socialising and modest UK holidays
• No car ownership

Moderate (one person: £31,700 | couple: £43,900)

• Two-week holiday abroad plus UK break
• Car ownership
• Regular socialising and leisure activities

Comfortable (one person: £43,900 | couple: £60,600)

• Greater financial freedom and flexibility
• Frequent holidays and socialising
• Broader range of activities and choices

Expectations vs Reality

When explained these standards, employees’ expectations reveal potential shortfalls:

• 22% expect only minimum standard – many on this trajectory may not achieve even basic comfort
• 45% expect moderate standard – the most common expectation
• 33% expect comfortable standard – but many high earners still expect only minimum lifestyle

Concerningly, 30% of individuals with personal income below £50,000 expect a comfortable retirement, suggesting unrealistic expectations that advisers can help recalibrate.

The Income Expectation Gap

Employees believe they’ll need an average of £58,000 per year for a good standard of living in retirement (median: £32,500). However:

• 13% think they’ll need £100,000+ annually
• 6% expect to need at least £200,000 per year

To achieve £43,900 annual income after tax (comfortable standard for one person, assuming full new State Pension), a pension pot of approximately £670,000 is needed, requiring contributions starting at £229 monthly and increasing by 2.5% annually to age 67.

This creates opportunities for advisers to provide realistic retirement projections and savings strategies.

Housing Cost Concerns

39% of employees expect to have rent or mortgage costs in retirement, rising to 46% of those aged 18-34. This significantly increases the income needed, making adequate pension savings even more critical.

The Advice Gap: Opportunities for Growth

Despite the clear value of professional guidance, over half of employees (52%) have never sought professional advice or guidance about their workplace pension.

However, those who do seek advice show markedly different outcomes:

• 41% who sought advice in the last year feel confident they’re saving enough vs 27% overall
• Advised clients are more likely to use employer matching (higher engagement across all pension actions)
• Those with advisers are more likely to make one-off contributions, switch investments, and transfer pensions

Income strongly correlates with advice-seeking behaviour:

• 81% earning £200,000+ have sought advice in the last year
• 59% earning £60,000-£69,999 have done so
• 30% earning £20,000-£29,999 have sought advice

This demonstrates both the value advisers provide and the opportunity to reach underserved markets.

Pension Transfers: Understanding the Drivers

Among employees who’ve had multiple jobs earning £10,000+ per year:

• 37% have transferred a pension at some point
• One in five transferred in the last year
• 59% have never transferred

Who’s Transferring?

Age is the strongest factor:

• 46% of 18-34 year olds have transferred vs 34% of 50-69 year olds
• Young employees are also more likely to transfer when changing jobs (43% vs 34% of older workers)

Gender differences:

• Men transfer more frequently overall, though women aged 18-34 show high transfer rates (41%)

Why People Transfer

The dominant reason is consolidation for easier management (40%), followed by:

• Better investment options or performance (25%)
• Advice from a financial adviser (22%)
• Lower fees/charges (21%)
• Better digital/online experience (19%)

Why People Don’t Transfer

Understanding barriers helps advisers address client concerns:

• 28% are happy leaving pensions where they are
• 16% don’t know how to start the process – an education opportunity
• 15% didn’t realise they could transfer
• 13% think it’s better to keep pots separate
• 12% find the process too complicated

The upcoming Pension Schemes Bill will automatically consolidate pots under £1,000 into approved schemes, potentially reducing the lost pensions problem (currently 3.3 million pots worth £31.1 billion).

Gender Pension Gap Insights

The research highlights several factors contributing to the persistent gender pension gap:

Contribution levels:

• Women contribute 4.5% on average vs 5% for men
• Median contribution: 3% for women vs 3.5% for men

Engagement levels:

• 33% of women have never checked their forecast vs 26% of men
• 14% of women never check pension savings vs 6% of men
• Women are less likely to take advantage of employer matching (specific rates vary by age group)

These findings suggest opportunities for targeted client engagement strategies addressing female pension savers.

Regulatory Changes: Opportunities Ahead

The Pension Schemes Bill

The Pension Schemes Bill introduces several measures that will impact adviser conversations:

Value for money requirements – DC schemes must prove value, protecting savers from underperforming schemes

Simplified retirement choices – All schemes must offer default routes to retirement income

Automatic consolidation – Small pots (£1,000 or less) will be moved to certified value schemes unless members opt out

Megafunds – Multi-employer DC schemes of at least £25 billion to drive down costs

LGPS consolidation – Six pools for Local Government Pension Scheme assets

DB scheme flexibility – Greater ability to release surplus for employer investment and member benefits

The Pensions Commission

The Pensions Commission is exploring retirement adequacy with the goal of creating “a strong, fair and sustainable pensions landscape that is fit to last into the middle of the 21st century and beyond.”

These changes create opportunities for advisers to help clients navigate complexity and make informed decisions about pension consolidation, transfers, and retirement planning.

Contribution Behaviour and Financial Pressure

Who’s Paying More?

Employees contributing more than 5% of salary are three times less likely to reduce contributions (only 4% reduced them in the last year vs 13% of those contributing under 5%).

However, 30% of high contributors increased payments in the past year vs 21% of lower contributors, suggesting success breeds further engagement.

Who’s Opting Out?

11% of workplace pension holders have opted out or stopped contributing in the past year, with additional 14% having done so previously.

Younger employees are more likely to opt out, though this may reflect greater job mobility. Interestingly, higher earners are slightly more likely to opt out, possibly due to tapered annual allowance concerns or alternative savings strategies.

Financial pressure affects contribution behaviour:

• Those with young children aged 4-6 show highest opt-out rates (33%)
• Employees living alone show lowest opt-out rates (23%)

This aligns with findings from the Royal London Financial Resilience Report 2025 showing mid-lifers with young children face the greatest financial pressure.

Information Sources: Where Employees Turn

Understanding information sources helps advisers position themselves effectively:

Primary sources:

1. Pension providers (39%) – Most relied-upon source, rising with income level
2. Employers (32%) – Close second, highlighting importance of workplace relationships
3. Financial advisers (21%) – Third most common, ahead of family, friends, government services, and financial websites

Age variations:

• Older employees rely more heavily on pension providers (48% of 50-69 year olds vs 32% of 18-34 year olds)
• Younger employees show no significant variation in provider reliance by gender (both 32%)

This suggests opportunities for advisers to strengthen relationships with both employers and pension providers to become a primary information source.

Practical Implications for Financial Advisers

Client Conversation Starters

This research provides several evidence-based talking points for client meetings:

Employer matching: “Did you know that 14% of employees who are offered employer matching contributions don’t use it? This effectively doubles your pension contributions at no extra cost to your employer. Let’s check if you’re taking full advantage.”

Retirement projections: “Research shows employees think they’ll need £58,000 per year for a comfortable retirement, but many aren’t on track. Shall we run a projection based on your current contributions and the Retirement Living Standards?”

Gender pension gap: “Women typically contribute 10% less than men to their pensions. Let’s ensure you’re maximising employer contributions and tax relief to bridge this gap.”

Consolidation benefits: “40% of people who transfer pensions do so for easier management. With lost pensions now worth over £31 billion, shall we track down any old pots you might have?”

Client Segmentation Opportunities

The research reveals distinct client personas that advisers can target with tailored marketing approaches:

The Confident Accumulator (27% of employees)

• Knows they’re saving enough
• More likely to seek advice
• Higher income, frequent pension checkers
• Opportunities: Investment optimisation, tax efficiency, estate planning

The Uncertain Saver (46% of employees)

• Saving but unsure if it’s enough
• Most common group
• Opportunities: Retirement projections, contribution strategies, pension consolidation

The Undersaver (20% of employees)

• Knows they’re not saving enough
• May feel hopeless or overwhelmed
• Opportunities: Realistic goal-setting, incremental improvements, employer benefit optimisation

The Disengaged (7% unsure or not saving)

• Smallest group but highest need
• Opportunities: Basic education, automatic enrolment review, simple starting points

Employer Relationship Development

With 32% of employees relying on employers for pension information, advisers can:

• Offer workplace pension education sessions
• Provide employer resources explaining matching contributions
• Develop total reward statements highlighting pension benefits
• Create employee engagement campaigns around key milestones

Measuring Success: What “Good” Looks Like

Based on this research, advisers can benchmark client outcomes:

Engagement metrics:

• Checking pension at least annually (72% do this)
• Understanding where pension is invested (53% have checked)
• Reviewing forecast in last 12 months (49% have done this)

Contribution metrics:

• Contributing at least 5% of salary (employee portion)
• Using employer matching if available (38% currently do)
• Making occasional one-off contributions (17% did so in last year)

Knowledge metrics:

• Understanding Retirement Living Standards (only 31% currently do)
• Knowing employer contribution levels (81% do)
• Awareness of investment options (47% have investigated)

Advisers can use these benchmarks to demonstrate the value they provide through improved client outcomes.

Technology and Engagement

The research reveals technology’s role in engagement:

App users show higher engagement:

• 65% of app users know where their pension is invested vs 49% using online portals
• App users check more frequently overall
• Better digital experience is a key transfer driver for younger employees

This suggests advisers should leverage technology in their service proposition, offering clients tools that complement rather than replace personal advice.

Looking Ahead: The Advice Opportunity

The evolving regulatory landscape – including the Pension Schemes Bill, the Pensions Commission’s work on adequacy, and the introduction of Targeted Support by the FCA – creates significant opportunities for advisers to:

1. Help clients navigate consolidation as small pots are automatically moved
2. Provide clarity on value for money as schemes are required to demonstrate this
3. Support retirement income decisions as default decumulation pathways are introduced
4. Bridge the adequacy gap for the 15 million workers not on track

The research demonstrates that advice makes a measurable difference – those who seek guidance are more confident in their savings, more engaged with their pensions, and more likely to take positive actions.

Methodology

This research was conducted online by Opinium between 4 and 14 July 2025, surveying 4,000 UK employees with pensions. Over four in five (85%) of the sample have a workplace pension, while some pay into personal pensions instead of or in addition to workplace pensions.

The full report is available from Royal London and provides additional demographic breakdowns and detailed analysis.

How Aspina Can Help

At Aspina, we specialise in marketing for financial services firms, helping advisers translate research insights like these into effective client acquisition and engagement strategies.

Whether you need support with content creation, lead generation, client education programmes, email marketing campaigns, or case study development, our team understands the regulatory environment and communication challenges facing financial advisers.

For insights on how advisers are approaching similar challenges, explore our analysis of recent adviser research and our guidance on retirement marketing opportunities.

Contact us today to discuss how we can help you capitalise on the opportunities revealed in this research and position your practice for growth in an evolving pensions landscape.

Note: This article is based on research conducted by Royal London. Financial advisers should ensure any client communications comply with FCA requirements and their firm’s compliance procedures. Past performance is not a guide to future performance.