11.6 million workers face retirement poverty

Low engagement with workplace schemes raises risk of retirement income shortfall   

Over a third (34%) of UK workers are at risk of not being able to cover their basic needs in retirement, according to fresh research from Scottish Widows.  

The new report – ‘Retirement Realities: Unlocking The Workplace Benefits’ – analyses the views of 1,000 senior decision makers with responsibility for pensions at their firms and 2,000 employees from a range of different sectors. 

The findings show that while full-time employees are actively contributing towards a pension, driven by higher average wages and auto-enrolment, one in five (20%) still face poverty in retirement. This is according to the National Retirement Forecast (NRF), which is a model created by Scottish Widows and Frontier Economics to estimate the potential retirement outcomes for people aged 22 to 65 based on their savings and spending behaviour.*  

The outlook worsens for part-time workers, who are more likely to earn below the £10,000 trigger for automatic enrolment, with a third (34%) at risk of not being able to cover basic needs.  

According to the latest estimates from Pensions UK, a minimum retirement lifestyle would cost a single person outside of London £13.4k per year in today’s money – excluding housing costs** – leaving retirees with minimal funds after basic living costs. Workplace pensions are expected to make up 63% of employees’ retirement income according to Scottish Widows’ research***.  

While auto-enrolment has helped millions of workers into workplace pension schemes, there is a need for default contribution rates to rise to meet increasing living costs. This isn’t the only reason why many workers are off course when it comes to building savings for the future, with clear gaps in engagement and understanding also contributing.   

Over a third (38%) of employees have little to no understanding of the pension-related benefits their employer offers. This lack of understanding persists despite support being offered by employers.  

Over two in five (45%) firms surveyed provide regular information and support to help employees make informed pension decisions and 41% take an active role in educating employees to engage with their pension, rising to 47% in large firms.   

Even in larger firms where this kind of support can be more extensive, employee understanding remains low, with 38% of those in large businesses having little to no understanding, rising to 41% in small firms and dropping to 36% in those medium sized.  

The opportunity for increased engagement is clear, as one in 10 (11%) firms said their employees aren’t engaged with their pensions, rising to 20% in small firms (10-49 employees).  

Graeme Bold, Managing Director of Workplace and Intermediary Wealth at Scottish Widows, said: “A workplace pension can be the most powerful tool people have to shape their financial future, but low engagement is holding people back from taking their best shot at long-term saving. 

 “We’ve completely reimagined how customers interact with their pension in our app to make it part of their everyday finances, tracking progress, connecting other financial products in one place and using gamified tools to help them make decisions that will really count later in life. 

“There’s a broader opportunity for pension providers, employers and those managing employee wellbeing to help them make the most of this workplace benefit. The government must also look at supporting part-time workers and lower earners with the expansion of auto-enrolment.”

Download full press release (PDF, 194KB)
 

Notes

Methodology  

There are 34,242,560 people working either full or part time in the UK according to the ONS Labour Force Survey - as of September 2025. 34% represents 11,642,740 people.   

*First run in 2023 with the help of Frontier Economics, the NRF assesses the potential retirement outcomes for those aged 22 to 65. It is a projection based on the current savings and behaviours of individuals and takes a comprehensive view of sources of retirement income, including the State Pension, private pensions, other long-term savings, and inheritance.

The NRF compares the retirement income people are on track for to the costs they could face living expenses for different retirement living standards defined by the Pension and Lifetime Savings Association (PLSA), now named Pensions UK, and housing costs for those who expect to rent or continue to pay off a mortgage in retirement. https://www.retirementlivingstandards.org.uk/  

**PLSA Retirement Living Standard: We use the retirement living costs published by the PLSA, now named Pensions UK. These vary between singles and couples, and also people living in and outside London. The thresholds are updated in line with CPI inflation from the data published by the PLSA to the effective date of this report. We have increased the thresholds from 2024 in line with inflation to reflect the rising cost of living – as shown in the table below.
 

***According to Scottish Widows’ annual Retirement Report: The research was conducted online by YouGov across a total 5,167 nationally representative adults aged 18+ in the UK between 22/01/2025 – 11/02/2025. This included a boost of 445 adults aged 18+ to better understand the retirement prospects of minority ethnic groups, also weighted to be representative of the UK minority ethnic population aged 18+. 

Notes to editors 

The employer survey asked UK employers about their workplace pension provision and the associated decision-making behind this offering. The survey was carried out online by Opinium Research Plc across a total of 1,000 senior decision makers with at least joint responsibility over pension schemes within their organisation. The sample of employers was restricted to those with at least 10 or more employees. 

The employee survey asked UK employees about the pension provision offered by their employer and their associated views of this offering. The survey was carried out online by Opinium Research Plc across a total of 2,000 UK employees at businesses with 10 or more employees. 

Fieldwork for both surveys was carried out between 11 July - 4 August 2025. 

About Scottish Widows  

Founded in 1815, Scottish Widows is part of Lloyds Banking Group, the UK’s largest digital bank and financial services group. With more than £232bn assets under administration and more than 6 million customers, Scottish Widows’ award-winning product range includes workplace and individual pensions, annuities, life cover, critical illness and income protection, as well as savings and investment products.

More than 2 million customers access Scottish Widows products and services through the Lloyds Bank and Scottish Widows apps, in addition to accessing directly through independent financial advisers. The Scottish Widows Platform is trusted by more than 18,000 advisers and 5,400 advice firms, which manage the pensions and investments of almost 166,000 clients.