The Scottish Widows has just published its 21st annual retirement report, examining the state of retirement provision among the UK’s working age population.

The findings highlight a growing retirement savings gap affecting millions across income levels and age groups.

The report’s National Retirement Forecast (NRF), jointly produced with Frontier Economics, projects retirement outcomes for those aged 22 to 65 based on savings, behaviours and income sources, comparing expected income to potential living and housing costs in retirement.

This year’s highlights were:

  • Current savings behaviours. 61% of people are on track for at least a minimum lifestyle in retirement, which covers basic needs with limited flexibility. In 2025 monetary terms, that equates to a net income of £14,800 for a single person and £23,100 for a couple, based on 3% inflation uprating of the 2024 Pension and Lifetime Savings Association (PLSA) minimum retirement standard. As usual, those figures exclude housing costs and will be higher for London.
  • Risk of poverty. 39% (about 15.3 million people) are on track to fall short of the minimum retirement threshold, 1% up on 2024’s number and 4% higher than in 2023, illustrating the scale of the retirement savings gap.
  • Pension savings increases. While pension savings have increased since 2024, they have not risen enough to keep up with the cost of living.
  • Median retirement income. The projected median (not average) retirement income has risen from £15.5k to £17.2k (including State Pension) since 2024. The adjusted PLSA targets for a moderately comfortable retirement are £32,200 (single) and £44,400 (couple).
    27% are concerned they will have to work longer than they hoped to ensure they have sufficient retirement savings, while 15% do not ever expect to be able to retire.

Of those saving at the minimum automatic enrolment contribution level:

  • 48% are heading for a minimum retirement lifestyle, whilst 35% are at risk of not being able to cover their basic needs in retirement.
  • Three groups that stand out as having the most unfavourable retirement prospects:
  • Generation Z (born between 1996 and 2010). The report sights competing financial goals make retirement savings a challenge for Gen Z. A quarter of people in their 20s prioritise saving for emergency expenses, while about one in eight say they are unable to save at all. The NRF projections showed that over 42% people in their 20s are at risk of poverty in retirement, while 23% would only be able to afford a minimum retirement lifestyle.
  • Squeezed low to middle earners. The minimum automatic contribution basis, with its carve out for the first £6,240 of earnings, leaves this category vulnerable as a significant part of their earnings is effectively unpensioned. The research found that those in their 30s earning £20,000 – £35,000 are the mostly likely to contribute at the minimum. While there is legislation on the statute books that allows the lower earnings limit to be cut or even removed, after April’s National Insurance (NICs) rise, the Government is highly unlikely to make any changes that add further to employer costs.
  • The self-employed. The UK’s 4.43m self-employed workers (December 2024-February 2025 data) have always been excluded from automatic enrolment and it shows. 51% are at risk of not being able to cover their basic needs in retirement with another 25% on track for a minimum retirement lifestyle. 23% not saving anything at all, effectively relying on the state pension alone.

If anyone is in one of those three vulnerable groups, all is not lost. Larger contributions late on can fill the retirement savings gap, though the longer they leave it, the larger those contributions will need to be.

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