Skip to content
In brief:
- The Second Pensions Commission’s interim report, published in May 2026, estimates that 43% of working-age people in Great Britain (around 15 million) are under-saving for retirement, based on government modelling of the income they would need
- A moderate retirement for a single person needs about £32,700 a year after tax, excluding housing costs, according to Pensions UK’s 2026 Retirement Living Standards, while the full new State Pension pays £12,548 a year
- 17% of UK adults (around 9.3 million people) have no private pension provision at all, and 29% of the self-employed have none, according to the FCA’s Financial Lives 2024 survey
Most of us have a pension statement sitting somewhere, unopened or opened once and filed. You glance at the number, think “that looks about right, I suppose,” and get on with the week. It’s rarely a lack of care. It’s that nobody ever told you what the number was meant to be.
That missing yardstick is what the retirement savings gap is really about. Not a scare story, just the distance between what most households are on course to have and what a comfortable retirement tends to cost. Here’s what the UK data says, where it’s firm, and where it’s modelled guesswork.
What “enough” actually looks like
The most widely used yardstick in the UK is the Retirement Living Standards, which were last updated in June 2026. According to Pensions UK (formerly the PLSA), with figures calculated by Loughborough University, the annual income needed after tax, excluding rent or mortgage costs, is:
| Standard | One person | Two people |
|---|---|---|
| Minimum | £13,900 | £22,500 |
| Moderate | £32,700 | £45,400 |
| Comfortable | £45,400 | £62,700 |
Set that against the full new State Pension, which is £241.30 a week, or £12,548 a year, from April 2026. On its own, it sits just below the minimum standard for a single person. Anything above that has to come from workplace pensions, private pensions, or other savings.
Pensions UK estimates the pot a single person would need to fund a moderate lifestyle, alongside the full State Pension, is roughly £335,000 to £505,000, depending on annuity rates. That is a modelled illustration with assumptions behind it, not a target everyone needs to hit, but it gives a sense of scale.
How many people are short?
This is where the numbers need careful handling, because different bodies measure “short” differently and the results don’t line up neatly.
The government-appointed Second Pensions Commission’s interim report, published in May 2026, found that 43% of working-age people, around 15 million, are under-saving against target replacement rates (the share of working income a retirement should replace). That matches DWP’s own modelling from July 2025, which put the figure at 43% (14.6 million). The same DWP analysis found 13% fall below the Retirement Living Standards minimum, 73% below moderate, and 91% below comfortable. All of these are modelled projections rather than counts of real pots, and the Commission itself notes its target rates “may be too ambitious.”
A different yardstick gives a different picture. Scottish Widows’ 2026 Retirement Report, based on a YouGov survey of 6,224 adults, found 31% (12.2 million) are on track for less than a minimum retirement lifestyle, down from 39% a year earlier. Scottish Widows attributes the improvement partly to savings held outside pensions, more people expecting to own a home, and falling energy costs, and warns it could reverse.
So which is right? Both are estimates built on different assumptions, and they shouldn’t be read as one trend line. What they agree on is the shape of the problem: a large minority of people, somewhere between three in ten and four in ten, are heading for a retirement that looks tighter than they’d want.
The size of the pot most people actually have
Behind those projections sit real pots, and many are small.
According to the Pensions Policy Institute’s DC Future Book, as reported by Pensions Age in October 2026, the median defined contribution pot was £15,400 in 2025, for private-sector workplace savers. This comes via a trade-press report of the PPI figures, so treat it as indicative. The same report suggests people now aged 45 to 54 are on course for pots about 15% smaller at retirement than those now aged 35 to 44.
The FCA’s Financial Lives 2024 survey, published in May 2025, found that 33% of adults currently saving into a defined contribution pension have less than £10,000, and a further 12% don’t know how much they have. The same survey found that 17% of UK adults, around 9.3 million people, have no private pension provision at all, rising to 47% of 18 to 24 year olds and 43% of households with an income under £15,000.
If you’re not sure how the different pension types work, our guide to UK personal pensions is a good place to get oriented before looking at your own statement.
Who slips through the gaps
Auto-enrolment has been a genuine success on participation. According to DWP’s July 2026 statistics, about 90% of eligible employees are saving into a workplace pension. The trouble is that the default is a floor, not a target. The minimum contribution is 8% of qualifying earnings in total, with at least 3% from the employer, and the Commission found that one third of eligible private-sector employees, and half of the lowest-paid, contribute only that minimum. The government has ruled out changes to auto-enrolment contribution rates in this Parliament, though the Commission says it will consider minimum rates and thresholds, with its final report due in early 2027.
Then there are the people auto-enrolment doesn’t reach. The Commission reports that only 17% of self-employed workers save into a pension, falling to 4% among the wholly self-employed. The FCA found that 29% of self-employed adults have no private pension provision. Those two figures measure different things, active saving versus any provision at all, so they aren’t contradictory.
When life gets in the way
Even people who start saving don’t always keep going. A Penfold survey reported by FT Adviser in September 2026 found 13% of UK employees had reduced, paused, or stopped pension contributions in the past 12 months because of financial pressure. That’s a provider-commissioned survey, so it’s a signal rather than an official measure. Scottish Widows’ own research points the same way, naming the day-to-day pressure of making ends meet as the biggest barrier to saving.
Small pots also get left behind. The Pensions Policy Institute estimated in October 2024 that around 3.3 million pensions were lost, worth about £31.1 billion. That’s a modelled estimate scaled from a sample, and it’s the most recent figure available, so it may well be different now.
Retirement doesn’t always happen on schedule
Plans and reality often part company. According to DWP’s latest labour market analysis, the average age people left the labour market in 2025 was 65.8 for men and 64.7 for women, the highest since records began in 1984. State Pension age is also rising, from 66 to 67, a change that began in April 2026.
Among people aged 50 to 64 who are not working and left a job in the last eight years, 28.3% left for health reasons, according to the same DWP release. That’s the reason for leaving the last job rather than a measure of early retirement, so it shouldn’t be read as “28% retired early.” But it’s a reminder that a retirement date isn’t always a choice, which is a good reason not to build a plan that only works if you work until 68.
One honest gap: we couldn’t find a reliable UK figure for the share of retirees who stopped work earlier than they planned, so we haven’t made one up.
The conversation couples haven’t had
Retirement is usually a household project, yet it’s rarely treated like one. LV= research with Opinium, published in May 2025, found fewer than 1 in 5 non-retired people had discussed their pension or retirement plans with their partner. The base there is all non-retired adults, not only those in couples, so the true figure among couples may differ.
Among people already in retirement, an Aviva and Age UK study published in November 2025 found 84% of those in a couple hadn’t checked whether their partner had named them as a beneficiary on their pension. That sample was restricted to a particular group of non-advised savers on moderate incomes, so it shouldn’t be read as representing all retirees. Even so, it points at a very ordinary blind spot.
We covered the wider version of this in our post on the UK gender wealth gap, which looks at how uneven pension positions inside one household can become a serious problem later.
What a household can do
You can’t change the system from your kitchen table. You can change how clearly you see your own position.
Find out your number. Most people have never added up what they actually have across workplace, private, and old employer pensions. Log in to each one, write the figures down, and add the State Pension forecast from GOV.UK. Tracing old pots is worth doing now, given how many go missing.
Compare it with a standard, not a hunch. Pick the Retirement Living Standards level that feels realistic for your household, then work backwards. Seeing that a moderate retirement for two needs about £45,400 a year after tax makes the target concrete.
Check what you’re paying in, not just whether you are. If you’re on the 8% default, ask whether a small bump is possible, and check whether your employer will match more. Nudging contributions up when you get a pay rise tends to hurt less than cutting spending today.
Keep a pension going through a rough patch if you can. If money is tight, pausing may be the right call. If you do, put a reminder in the diary to restart, because the pause is what tends to stick. Our guide to building an emergency fund for your family can help protect your pension from being the first thing raided when something goes wrong.
If you’re self-employed, build your own auto-enrolment. Set up a regular transfer into a pension on the day you get paid, so it doesn’t depend on remembering. Our guide to investment options for retirement in the UK explains where that money can go.
Talk about it as a couple. Put both pension positions side by side, check who is named as beneficiary on each, and agree a rough retirement age. Our guide to mastering tough family financial conversations has some ways in if the subject feels awkward.
Plan for retirement not being on your schedule. Ask what your finances would look like if you had to stop at 62 rather than 67. If the answer is “not good,” that tells you where to focus.
The bottom line
The retirement savings gap isn’t one number. It’s a handful of estimates, from government and providers, that all point the same way: a sizeable share of households are heading for a retirement tighter than they’d like, and many don’t know their own position.
The encouraging part is how much of this is fixable at household level, and how little of it needs a big gesture. Knowing your number, nudging contributions up, tracing a lost pot, and having one honest conversation with your partner will take most households further than another year of not looking.
See your full financial picture in one place.
Built for individuals and families. Free to begin, no card needed.
FCA-registered and trusted by families in over 100 countries tracking over £200 million in assets.
