UK Pension Gap: Millions Still Falling Short
For most Brits, the steady hum of a job pays the rhythm of a retirement. Yet a stark reality looms: millions are under‑pensioned. Their private pension income sits between £3,650 and £6,750—well below the national average of £8,500—leaving many bracing for a shaky financial future.
Auto‑Enrolment: A Game Changer, Yet Not a Solution for All
Since 2012, the UK’s auto‑enrolment scheme has ushered in more than 11 million workers into pension plans. However, eligibility limits mean many still miss the boat.
- People with disabilities earn a pension that’s only 43% of the average—just £3,650.
- Women hit 67% of the average, dropping to 54% for single mothers.
- Self‑employed folks trail at 54% relative to the UK average.
- Carers and those from ethnic minority backgrounds see growth, yet still lag at 62–80%.
Progress Amidst Gaps
Eligibility for auto‑enrolment has climbed—from 77% in 2020 to 85% in 2025—yet the numbers tell a different story. Women and single mothers retire with less than three‑quarters of the typical pension.
Key Voices From the Sector
Joanne Segars, Chair of Trustees at now:pensions, calls for ambitious reforms: “Remove the £10,000 auto‑enrolment earnings threshold, ditch the lower earnings limit on contributions, and introduce a family carer’s top‑up.” She says these tweaks are the final push needed for a financially secure future.
John Adams, Senior Policy Analyst at the PPI, points out that tackling auto‑enrolment criteria—such as counting combined incomes or wiping out the earnings trigger—could “make huge strides” for carers, single mothers, and divorced women.
Samantha Gould, Head of PR & Campaigns at now:pensions, highlights ongoing barriers: “People who work part‑time, earn lower wages, or step away to care for others face systemic obstacles that curb pension growth.” She urges a continued push to level the playing field.
Understanding the Numbers
- Under‑pensioned groups earn 62–80% of the national average but still fall short of the £8,500 benchmark.
- The Underpensioned Report 2025 comes out of a partnership with the PPI, drawing data from the 2024 edition of the Underpensioned Index.
While there’s been progress in bringing more people into retirement savings, the gap remains wide. Without policy intervention, millions may continue to struggle for a secure retirement. They need a brighter path forward—one that recognizes the diverse ways people earn, work, and care.
To stay updated on how this issue evolves, subscribe now—get timely insights straight to your device.
