A new survey has revealed that millions of people are at risk of retirement poverty.
And while pension saving levels have increased in the last year, they haven’t kept in line with the cost of living.
The Scottish Widow’s annual Retirement Report shows that rising living costs have worsened the nation’s retirement outlook since 2023. Two-fifths (39%) of people in the UK aren’t on track for a minimum lifestyle in retirement, worsening from 35% in 2023.
The report has also put a spotlight on the people facing the most serious retirement challenges – self-employed workers, Gen Z and low to middle income earners.
With the UK’s 4.39 million self-employed workers still being excluded from automatic enrolment, this has left many with poor retirement outcomes.
Over half (51%) are at risk of not being able to cover their basic needs in retirement, and just 25% are on track for a minimum retirement lifestyle.
Two in five (39%) self-employed workers believe they aren’t saving enough for retirement, with 23% not saving anything at all.
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Pete Glancy, Head of Pensions Policy at Scottish Widows, commented, “Our research couldn’t be more timely, spelling out just how crucial targeted measures are in preventing millions from living in retirement poverty in the coming years.
“The second phase of the Government’s Pensions Review must be broad enough to take a holistic view on people’s financial journey through life, considering wide-ranging financial goals. There are three key areas that must be addressed urgently: auto-enrolment, self-employed contribution rates and housing, considering both home ownership and affordable housing.
“For now, the challenge is helping people make the most of what they have. It is essential to ensure people feel financially empowered to make informed decisions and take proactive steps for their future – with a strong sense of financial independence playing a key role.”
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