An extra 1.2mn people are not on track for even a minimum retirement lifestyle as the UK pension savings gap widens.
The Scottish Widows’ annual retirement report revealed the percentage of people not on track for what the PLSA deems a minimum retirement has worsened from 35 per cent to 38 per cent since 2023.
It also found 54 per cent of UK retirees expect to work longer than they would like, on average by seven years, while 27 per cent of those who have made retirement plans don't feel that they would ever be able to afford it.
According to the report, younger people would like to retire even earlier with those aged 18-29 wanting to retire at 61 and only prepared to work until they reach 64, if necessary.
The increase in those projected to suffer the poorest retirement outcomes has been driven by rises in the cost of living relative to the growth in wages at an average of just 6.2 per cent, Scottish Widows revealed.
Only 42 per cent of people felt they had the headroom above day-to-day pressures to save anything for retirement.
Pete Glancy, head of pensions policy at Scottish Widows said the growing gap in retirement outcomes and people’s quality of later life between those who are currently retired and those who will retire in the future was of “great concern”.
“However, people are starting to think about how their private pension pot might interact with their state pension entitlement to plan their retirement.
"But, there is still a real reliance on the state pension, and while some will be able to use their private pension pot to give them the flexibility they are looking for in terms of retirement age, it’s only starting to dawn on others that they may end up working for much longer.
“It is likely to be a long time before Britain has been saving enough to give future pensioners the outcomes they hope for. In the meantime, helping people to make the very most of what they have is going to be critical.
“It’s the right moment for the new government to take a holistic view on people’s financial resilience throughout life, paying particular attention to those whose retirement outcomes are predicted to be much lower,” he added.
The report also revealed that 54 per cent of respondents expected the state pension to eventually form a meaningful portion of their retirement income with 75 per cent calling it “hugely important” in helping them pay for everyday necessities.
However, 12 per cent were not convinced this level of help will be available to them by the time they retire.
Paul Leandro, partner at Barnett Waddingham felt this research was a stark reminder that the UK was yet to “defuse the ticking time bomb” that is its pension system.
He said: “Time and time again, research has pointed to the inadequacy of pension contributions across all age groups, and until there is a significant increase the situation will only worsen.
