Around 15 million people in the UK are currently undersaving for retirement, according to the Pensions Commission’s May 2026 interim report. That’s not a small gap — it’s roughly one in four working-age adults who aren’t putting enough aside to maintain their living standards after work ends. And the problem goes deeper: 45% of working-age adults — about 18 million people — aren’t saving into any pension at all, despite many being in work.
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This article is general information only and does not constitute professional advice. For your specific situation, consult a qualified professional.
Auto-enrolment has been a genuine success — 89% of eligible employees now save into a workplace pension, up from 55% in 2012. But participation alone doesn’t equal adequacy. Half of savers are contributing at the minimum level, and low and middle earners are most at risk. The Pensions Commission, relaunched in July 2025 on the model of the original Turner Commission, is tasked with fixing this. Its final report is due in early 2027. For anyone under 50 today, the changes it recommends could reshape how retirement savings actually work. Here’s what you actually need to know.
What I tend to notice is that most people still think of a pension as a single thing you either have or don’t. The reality is more fragmented — and the alternatives now being built could change that. If you’re just starting to think about this, the case for starting early has never been clearer.
The Real Retirement Savings Numbers
The headline figures from the Pensions Commission tell a story that’s hard to ignore. 45% of working-age adults — roughly 18 million people — have no pension savings at all. Among those who do work, 2 in 5 still aren’t saving. And for those who are, around half are contributing only the minimum auto-enrolment level, which is widely considered insufficient for a comfortable retirement.
The engagement problem is just as serious. Over half of adults contributing to a Defined Contribution pension have low or very low levels of engagement with their pension. 31% don’t even know their pot is invested. And 68% of non-retirees expect their pension income to fund their retirement — meaning most people are betting on a system they barely understand.
Life expectancy adds another layer of uncertainty. A man reaching State Pension age in 2025 has a 25% chance of dying before 79 and a 25% chance of living beyond 91. A woman at the same point has an average life expectancy of around 89, with a 1-in-10 chance of reaching 98. That means retirement income needs to last for decades, not years. The Pension Schemes Act, which benefits 22 million workers by up to £29,000 by retirement, is designed to help with this — but only if people stay engaged.
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| Group | Saving rate | Key risk |
|---|---|---|
| Eligible employees (auto-enrolment) | 89% | Most at minimum contribution level |
| Working-age adults overall | 55% | 45% not saving at all |
| Self-employed workers | 4% | Almost entirely outside the system |
| Low and middle earners | Around half at minimum | Inadequate contributions for lifestyle |
These aren’t abstract figures. A 30-year-old on median earnings saving only the minimum auto-enrolment amount could end up with a retirement pot far below what they’d need for a comfortable retirement — especially if they take career breaks, work part-time, or move between jobs. The gap between what people save and what they’ll need is the central problem the Commission is trying to solve.
Where the Current System Falls Short
Early access is draining pots before retirement
3 in 10 private pension pots are accessed at the earliest possible opportunity, and half of all pots taken out are withdrawn in full. The research shows that nearly half of these withdrawals are for large expenses — cars, holidays, renovations — not for retirement income. This is a mechanical problem: once the money is out, it’s gone, including the tax relief and compound growth it would have earned. The 33% of people who partially encashed their pension felt confident they had enough to last, but only 30% of those who fully encashed said the same.
Low engagement means poor decisions
31% of DC pension contributors don’t know their pot is invested. Over half have low engagement. When it comes time to access the money, 38% of people who decumulated a DC pension in the last four years did so without receiving any financial advice. The government’s guided retirement principles aim to fix this by designing default pension paths that don’t require complex decision-making — but those rules are still being developed.
The self-employed are almost invisible in the system
Only 4% of wholly self-employed workers save for retirement. Among younger self-employed people, the rate is even lower. Auto-enrolment doesn’t cover them because there’s no employer to set up the scheme. The Pensions Commission’s remit includes expanding coverage, but no specific solution has been proposed yet. For anyone self-employed, the gap isn’t just about saving less — it’s about having no structured option at all.
- Check your current pension contributions — are you at the minimum or have you increased them?
- Review your National Insurance record for gaps that could affect State Pension entitlement
- If self-employed, set up a personal pension or SIPP even with small contributions
- Before accessing any pension pot, check how it affects your future income and benefits
- Consider speaking with a financial advisor before making withdrawal decisions
Alternative Approaches to Retirement Savings
Collective Defined Contribution (CDC) schemes
CDC schemes are the most significant structural alternative to traditional DC pensions. Instead of each person carrying their own investment and longevity risk, the risk is shared across a pool of members. This provides more predictable income in retirement without the full cost of a defined benefit guarantee. The Pensions Commission is exploring CDC models as part of its review, and the Pension Schemes Act has paved the way for their wider adoption. For most savers, the appeal is straightforward: less uncertainty about how long the money will last.
Guided retirement and default pension paths
The government’s guided retirement principles, published under the Pension Schemes Act 2026, require trustees to provide well-designed default pensions. The idea is that most savers should only need to make one decision — when to access their pension — and whether to stay in the default or choose an alternative. The FCA is introducing rules to make these defaults available through workplace pensions. For someone with low engagement, this removes the need to navigate complex investment choices, sequencing decisions, and withdrawal strategies on their own.
Auto-enrolment expansion and the self-employed gap
The government has ruled out changes to auto-enrolment contribution levels this Parliament, but the Commission’s remit includes expanding coverage to groups currently excluded. The most obvious gap is the self-employed, who make up a growing share of the workforce. The Commission is also looking at how to close the gender and income disparities that leave women and low earners with significantly smaller pots. The final report in 2027 is expected to recommend specific changes to contribution tiers and eligibility thresholds.
What the Pension Schemes Act 2026 means for you
The Act is designed to benefit 22 million workers by up to £29,000 by retirement through lower costs, better returns, and auto-consolidation of small pots. For anyone who has changed jobs multiple times — which is most people under 40 — small pots scattered across old employers will be consolidated automatically. This matters because lost pots are a major source of disengagement. If you can’t find your pension, you can’t manage it. The Act also enables the guided retirement framework, meaning the default you’re placed into at retirement will be designed to provide a sustainable income, not just a lump sum.
For those who want to understand how these changes fit into a broader retirement plan, a financial advisor can help clarify the options based on your specific circumstances.
Frequently Asked Questions
Can I lose my pension if I don’t engage with it? ▾
What happens if I take my pension early and then need more money later? ▾
Is the State Pension enough to live on? ▾
What if I’m self-employed and haven’t saved anything? ▾
How does the Pension Schemes Act affect me? ▾
What Comes Next for UK Retirement Savings
The Pensions Commission is running through 2026, with its final report due in early 2027. The government has already ruled out changes to auto-enrolment contribution levels in this Parliament, meaning the next window for structural reform opens in 2028 or later. But the direction of travel is clear: the system is moving from “get people saving” to “get enough saved.” For anyone currently in work, the decisions made in the next two years will determine how much you’re expected to save, how your pension is managed by default, and what happens to the small pots you’ve left behind at old jobs.
Remember: this article is general information only. For advice on your specific situation, speak to a qualified professional.
If this was useful, you might also want to read Retire Rich, Live Lush: Is a £500k Pension Enough in the UK?.
Sources and Further Reading
Retirement Planning for Millennials — A practical guide for younger savers who need to start thinking about adequacy, not just participation.
Retirement Regrets: Avoid These Common Mistakes — Real-world pitfalls that cost savers thousands, including early access and low engagement.
UKPol.co.uk (2026). Britain is undersaving for retirement, warns Pensions Commission. 🔗
Gov.uk (2026). Pension Schemes Act 2026: Guided Retirement Guiding Principles. 🔗
UKEmploymentHub.com (2025). The Pensions Commission Returns: Rethinking Retirement for a New Generation. 🔗
