Most UK Workers Aren’t Saving Enough for Retirement. Employers Can Help Change That.
The numbers coming out of the pensions sector right now should give any HR team pause. According to a new report from Pensions UK, more than three quarters of the working population are not on course to achieve a moderate standard of living in retirement. And as Employee Benefits magazine reports, 2.2 million people have stopped engaging with their pension entirely because they simply don’t believe retirement will ever be possible for them.
That second figure is the one that should concern employers most. It’s not a savings problem. It’s a confidence problem, and that’s a harder thing to fix.
What “Moderate” Actually Means in Retirement
Before getting into what employers can do, it’s worth understanding what these retirement income benchmarks actually represent. The figures used in the Pensions UK report are produced independently by the Centre for Research in Social Policy at Loughborough University and are intended as practical planning guides rather than aspirational targets.
A minimum retirement lifestyle for a single person costs around £13,900 a year. That covers the basics: weekly groceries, a UK holiday, eating out about once a month, and a couple of affordable activities each week. For two people, the minimum sits at roughly £22,500.
Most workers, around 82%, are expected to reach that level. The problem is that most workers also expect considerably more than the minimum.
A moderate retirement, which the BBC’s coverage of the report describes as including a reasonable social life and some financial comfort, costs £32,700 a year for a single person and £45,400 for a couple. Only 23% of workers are currently on track to reach that. A comfortable retirement costs more again, at £45,400 for one person and £62,700 for two, and just 9% of workers are heading there.
Zoe Alexander of Pensions UK put it plainly: “Far fewer will go beyond that. That is out of step with what people expect for their future. Without action, too many risk facing a cliff-edge drop in income when they stop work.”
Rising food costs and the price of socialising have pushed these thresholds up compared with last year. Housing costs aren’t factored in, which means for anyone still carrying a mortgage or renting in retirement, the real figures will be higher still.
The Gender Gap Employers Cannot Afford to Ignore
Any honest conversation about pension adequacy has to address the gender dimension, and this is somewhere the original Pensions UK coverage deserves more attention than it often gets.
HMRC data shows that women have roughly half the pension savings of men. Research from investment platform AJ Bell points to age 28 as the point where women start falling behind, which broadly maps onto the years when career breaks, part-time working, and caring responsibilities begin to have a financial impact.
For HR professionals, this isn’t background context. It directly affects pay gap reporting, benefits design, and any meaningful commitment to workplace equality. A financial wellbeing programme that treats the workforce as a single homogenous group is going to miss a significant portion of the people who need it most.
Why 2.2 Million People Have Given Up
There’s a meaningful difference between someone who isn’t saving enough and someone who has mentally checked out of the whole conversation. The Employee Benefits research on the 2.2 million disengaged workers points to something more serious than low financial literacy: these are people who don’t believe the system will work for them.
That creates a real problem for employers. If an employee has already concluded that retirement isn’t realistic, a pension statement or a lunchtime webinar isn’t going to move the needle. Getting someone re-engaged starts with addressing that underlying loss of confidence, not by leading with contribution rates or investment options.
Education, delivered well, can help. But it has to start from where people actually are, not where we’d like them to be.
The Policy Backdrop
The retirement savings shortfall isn’t news to government. Ministers have revived the Turner Pension Commission, the body whose 2006 report led to automatic enrolment into workplace pensions. The commission’s interim findings suggest the problem is getting worse rather than better. Workers retiring 25 years from now are projected to be around £800, or 8%, worse off per year than today’s retirees if nothing changes.
Automatic enrolment was a significant step forward, but minimum contribution rates were never designed to deliver a moderate retirement. They were a floor, not a target. The gap between where most people are and where they need to be isn’t going to close without more active intervention.
The Difference Between Information and Understanding
Most employees in workplaces with auto-enrolment have access to pension information. They get annual statements. They can log into a provider portal. What many of them lack is the understanding to make that information useful.
There’s a meaningful list of things people commonly don’t understand about their workplace pension:
- How contributions are actually invested and what that means over time
- What the difference between minimum, moderate and comfortable retirement looks like in practice
- How inflation quietly erodes the real value of savings
- How small changes to contributions made earlier in a career compound significantly by retirement
- How pension planning connects to broader financial decisions like budgeting, debt management, and housing
Bridging that gap is what financial wellbeing education is for. It’s worth being clear about what that means and what it doesn’t. Education helps people understand their options and feel more confident making decisions. It isn’t regulated financial advice and doesn’t involve personal recommendations. That distinction matters for employers considering how to support their workforce without taking on regulatory risk.
Retirement Doesn’t Happen in Isolation
One reason pension engagement is difficult to sustain is that retirement feels like a distant priority for most workers, particularly those dealing with immediate financial pressures. Someone managing debt, a tight household budget, or rising childcare costs isn’t naturally going to prioritise their pension.
Good financial wellbeing education takes this into account. It helps people see how the different parts of their financial life connect, and why decisions made today, even modest ones, have consequences that compound over decades. The goal isn’t to make everyone a pension expert. It’s to help people feel less overwhelmed and more capable of taking a step in the right direction.
What Employers Can Actually Do
Employers sit in a genuinely useful position here. They have regular contact with their workforce, existing benefits infrastructure, and in many cases the trust of their employees on financial matters. That’s a significant platform for making a difference.
The starting point isn’t a complicated one. Accessible, well-designed financial wellbeing education, covering pensions, budgeting, saving, and the basics of long-term planning, can help employees engage more meaningfully with their retirement and with their finances generally. It won’t solve the structural challenges in the UK pension system. But it can make a real difference to individuals who currently feel that retirement is something that happens to other people.
At Aspina, we provide online financial wellbeing learning designed specifically for workplace delivery. Our e-learning modules cover pensions, retirement planning, budgeting and saving in a way that’s clear and accessible to employees at every level of financial confidence.