Half of Savers Think They Can Never Afford to Retire

A new study has found that over half of people saving into pensions in the UK believe they will never save enough money to retire comfortably. The research also revealed that homeowners, many of whom are contending with high mortgage costs and other household bills, had similar concerns about retirement.

The study by the Living Wage Foundation showed that 39% of homeowners worry about not saving enough for retirement and 34% worry about not being able to meet their basic living costs. Additionally, 8% of pension savers who own their homes stopped or reduced their pension contributions in the six-month period leading up to February 2023.

To combat low retirement saving levels, the Living Wage Foundation is promoting the concept of a ‘Living Pension’ and encouraging employers to contribute more to their workers’ pensions than the compulsory minimum rates. Under auto enrolment, employers are required to contribute a minimum of 3% of their employees’ earnings into their pensions, while workers contribute 4% and the government adds 1% in tax relief. However, many employers are willing to match contributions of 4%, 5%, or even 6% if employees choose to save a higher proportion of their income.


1. The Big Picture: Many people in the UK who are saving for retirement feel they won’t be able to save enough to retire comfortably. This concern isn’t just among those with pensions but also homeowners, many of whom are juggling the costs of their homes with other expenses.

2. The Homeowners’ Worry:

  • About 39% of homeowners feel they aren’t saving enough for a nice retirement.
  • 34% believe they might not be able to cover their basic needs when they retire.
  • Interestingly, even though owning a home is often seen as a form of financial security, 54% of homeowners who have been saving for a pension think they’ll need to work indefinitely.

3. Some Recent Trends: In just six months (leading up to February 2023), 8% of pension savers who also own homes either stopped or reduced the amount they were putting into their pension funds.

4. What is “Living Pension”? The Living Wage Foundation, a group that campaigns for fair wages, is promoting something called the ‘Living Pension’. This aims to ensure people save enough during their working lives to have a decent retirement. They want employers to contribute more to their employees’ pension funds than the currently required minimum.

5. Current Pension Rules (Auto enrolment): At present:

  • Employers contribute at least 3% of an employee’s earnings (within a certain range) to their pension.
  • Employees contribute 4%.
  • The Government adds an extra 1% in tax relief.

But, some employers match even higher contributions if the employee chooses to save more of their salary.

6. The Living Pension’s Goal: They’re advocating to:

  • Boost total savings from 8% to 12%.
  • Increase employer contributions from 3% to 7% for all their direct staff.

7. Snapshot from the Survey:

  • The Foundation’s survey covered 3,059 adults currently paying into a pension.
  • Of these, 1,973 were homeowners, 848 were tenants, 216 lived with their parents, and 22 had other living situations.
  • A concerning 56% of the total surveyed don’t believe they’ll ever stop working.

8. Living Wage vs. Living Pension: The Foundation also promotes the Living Wage, which is an hourly rate believed to provide a basic but decent lifestyle. This initiative, started in 2001, has 13,000 employers on board. The current rates are £10.90/hr outside London and £11.95/hr in London for those over 18. In comparison, the Living Pension campaign, which began more recently, has convinced 18 employers to join since its launch.

9. Personal Stories: The article shared some personal experiences:

  • Widow Eva (65 years old) is selling her house to manage her expenses as she nears state pension age. She talks about the financial hardships she’s faced, especially after her partner’s death.
  • Sarah, in her 50s, worries about her future. The increasing cost of living, stagnant salaries, especially for women, and the rising retirement age mean she feels she might never be able to retire fully.

10. Practical Tips for those Concerned about Pensions: If you’re concerned:

  • Review your existing pensions, understanding the current values and any guarantees.
  • Use online pension calculators to project your retirement savings.
  • Add these figures to your anticipated state pension (which is about £10,600 a year if you qualify for the full rate).
  • Before merging pensions, ensure you’re well-informed to avoid any penalties.
  • If you’ve lost track of old pensions, use the Government’s free pension tracing service. But be careful online as some fraudulent companies pretend to offer this service but have other motives.

In essence, there’s growing concern among UK residents about their financial futures, especially in retirement. Organizations like the Living Wage Foundation are campaigning for better savings and contributions from employers, aiming to ensure a more comfortable retirement for all.