More than a third of UK workers fear they may never be able to afford to retire because rising living costs are preventing them from saving enough for later life, according to new research.
It suggests many employees are prioritising day-to-day spending over long-term retirement planning, raising concerns that financial pressures today could leave large numbers of people working longer than they had expected.
The research, by financial wellbeing and retirement specialist WEALTH at work, also found widespread concern about retirement adequacy as employees continue to save at or close to minimum workplace pension contribution levels.
Retirement concerns grow
The survey found that 38 percent of employees with a defined contribution workplace pension feared they would never be able to afford to retire because of increased living costs.
More than four in five (83 percent) said rising household costs would leave them less comfortable in retirement because of a shortfall in pension savings, while 82 percent believed they would need to work longer to make up the difference.
The study also found that 36 percent would like more information about how much they need to save to retire comfortably, indicating that many workers are contributing less than levels recommended for a minimum standard of living in retirement.
Overall, 41 percent said total workplace pension contributions, including employer and employee payments, were at or below the minimum 8 percent required under automatic enrolment. A further 29 percent said contributions totalled between 9 percent and 11 percent, while only 20 percent reported saving 12 percent or more, the level recommended under the Living Pension benchmark.
One in 10 employees admitted they did not know how much was being contributed to their pension. Despite this, 45 percent believed they were saving enough for retirement, pointing to a gap between employees’ confidence and contribution levels.
Cost pressures limiting pension saving
Financial pressures were identified as the biggest barrier to increasing pension contributions. One in three (33 percent) employees said they could not currently afford to save more because of the rising cost of living.
But many said they wanted to improve their retirement prospects. Three in 10 planned to increase pension contributions in future, while one in four (25 percent) wanted guidance on how to do so.
Jonathan Watts-Lay, director of WEALTH at work, said many people were struggling to balance immediate financial pressures with long-term retirement planning.
“When meeting day-to-day living costs become difficult, it’s often long-term savings that take a back seat. But even small changes early on can make a huge difference over time, particularly when combined with employer contributions and investment growth.”
He said many employees disengaged because pensions appeared complicated and distant.
“That’s why ongoing support throughout someone’s working life is so important. The earlier individuals engage with their finances, the more options they’re likely to have later on. Workplace financial education plays a critical role, giving people the knowledge and confidence to make informed decisions early and consistently.”
Growing role for workplace financial education
The research comes as employers continue to expand financial wellbeing support alongside traditional reward packages.
Automatic enrolment requires minimum pension contributions of 8 percent of qualifying earnings, with at least 3 percent coming from employers. But pension experts have long argued that higher contribution rates are often needed to achieve a comfortable standard of living in retirement, particularly for those who begin saving later in their careers.
WEALTH at work said employers could help improve retirement outcomes by providing financial education throughout employees’ working lives, including guidance on budgeting, increasing pension contributions over time, making the most of employer contributions and reviewing investment choices regularly.
William Furney is a Managing Editor at Black and White Trading Ltd based in Kingston upon Hull, UK. He is a prolific author and contributor at Workplace Wellbeing Professional, with over 127 published posts covering HR, employee engagement, and workplace wellbeing topics. His writing focuses on contemporary employment issues including pension schemes, employee health, financial struggles affecting workers, and broader workplace trends.
- William Furney
- William Furney
- William Furney
- William Furney
