More than 12 million people in the UK are at risk of retirement poverty, according to a new study – but there are ways to boost your pension pot.
When it comes to how much money you’ll need to retire, a third (31%) of adults aren’t on track to meet even a minimum standard of retirement lifestyle based on their pension savings, behaviours and income.
The findings come from Scottish Widows’ latest Retirement Report, which projects how financially well a group of 22 to 65-year-olds will fare in later life.
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The retirement firm's report shows an improvement however – the number of people facing retirement poverty has fallen from 39% in 2025. Falling house prices and energy costs have eased some of the cost of living pressures driven by inflation.
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However, it warned challenges still remain for a significant number of UK adults, with energy costs set to rise due to the conflict in the Middle East and savings habits still precarious.
Pete Glancy, head of pension policy at Scottish Widows, said: “While the fall in pension poverty compared to a year ago is a step in the right direction, this shift in retirement fortunes is complex and the current state of the nation's savings is still polarised.
“The factors we can control, like how much we save or how much we expect to receive in retirement, may improve, but can easily be thrown off course by shifting external factors like increases to energy and general cost of living.”
Which groups are most at risk of pension poverty?
Scottish Widows’ report is benchmarked against Pension UK’s Retirement Living Standards (RLA), which gives a rough guide as to how much people would need to spend to live a certain standard of living in retirement.
The report found 31% of UK adults are facing pension poverty, as assessed by not meeting the RLA minimum standard of living, which judges a basic retirement costs £13,400 annually or £21,600 for a couple, after tax.
Most pension savers are expected to achieve at least the minimum standard of living thanks to the state pension, which pays out up to £12,547 a year.
Meanwhile 30% can expect a moderate standard of living, which, after tax, costs around £31,700 for one person. For a couple, a moderate retirement costs around £43,900 annually, after tax.
Finally 30% are likely to have a comfortable retirement, which for one person, after tax, costs around £43,900 a year, Pensions UK says. For a couple, a comfortable retirement after tax costs around £60,600 a year.
Differences in ethnicity, type of job and health were factors found to have a major impact on people’s later-life financial prospects.
For example, those who are Indian or Pakistani are most likely to be on track for above minimum retirement incomes while those who are Black or Mixed race are more likely to fall below minimum retirement outcomes.
The report said two key factors explained the differences in outcomes across different ethnic groups – having pensions arranged and the expectation of owning a home in later life.
For example, 66% of those who are Indian said they have a pension arrangement in place versus 57% across all ethnicities while 18% expect to rent in retirement versus 23% overall.
The self-employed and part-time employed, perhaps unsurprisingly, were found to be more likely to come up short in retirement. Just 19% of full-time workers are facing pension poverty versus 34% of part-time workers and 35% of self-employed people.
People with a vulnerability, including those in poor health, with caring responsibilities, or poor literacy or numeracy skills, are also more likely to struggle financially in retirement.
The report found 50% of those in poor physical or mental health won’t be able to live even a minimum level of retirement versus 27% in good health.
How to boost your pension
There are a number of steps you can take to boost your pension and ensure you’re not faced with an income shortfall in later life.
One way is by increasing your auto-enrolment contributions. Auto-enrolment was introduced in 2012 and means your employer has to set up a workplace pension for you unprompted.
The minimum contribution made each month is 8% (5% from you including 1% in tax relief from the government) and 3% on top from your employer. However, some employers will let you pay more each month and sometimes match your amount.
In addition, if you have opted out of your workplace pension scheme, it’s advisable to rejoin, even if finances are tight.
If you’ve worked multiple jobs, it could be worth tracing lost pensions and consolidating them into one to manage fees, as well as make life easier for yourself logistically.
Ed Wood, senior financial planner at wealth manager Rathbones, said: “You can contact previous employers, or verified pension tracing services can make a search across multiple providers for you, at no cost.”
For example, you could use the government’s Pension Tracing Service to find an old pension for free.
It’s also worth checking your state pension record to ensure you’re in line to receive the maximum amount. You need 35 years of National Insurance contributions to receive a full new state pension.
Gary Smith, financial planning partner at wealth manager Evelyn Partners, said: “If there are any missing years identified, these might simply be administrative errors that can be rectified but, if not, making additional contributions can be a very cost-effective method of boosting your retirement income.”
