Millions of people are currently locked out of workplace pensions in the UK, missing out on £1.2 billion of annual pension contributions

NOW: Pensions, the workplace pension provider for 1.8 million people, has published a report  identifying the seven most ‘under-pensioned’ groups in the UK (including single mothers, divorced women, BAME groups, people with disabilities, carers, the self-employed and multiple job holders). The research reveals that these groups are reaching retirement age with approximately 15% of the average UK pension wealth.

The report, created in collaboration with the Pension Policy Institute (PPI), reveals that only 42% of BAME groups, 53% of carers and 50% of disabled people are currently saving into a private pension, and people with disabilities are receiving a pension wealth of just £7,450, just 9% of the UK average.


Median private pension wealth % with any pension savings Median private pension wealth (among those with savings)
UK population average £80,690 65% £217,490
Single mothers £18,310 55% £140,400
Divorced women £26,100 59% £140,400
BAME £0* 42% £189,900
Disabled £7,450 50% £111,730
Carers £29,800 53% £180,620
Self-employed £0* 36% £121,200
Multiple job holders £2,650 71% £12,400
Men £203,200 87% £302,500

*This is £0 because the majority of people in these groups do not contribute to any pension saving, so when we divide the total pension wealth for this group with the number of individuals it averages out at £0.

The report found a number of common factors within these groups which are presenting barriers to saving, including non-traditional work patterns, a lower percentage of home ownership, and being impacted by inequalities in the labour market. The inequalities mean they have less access to higher-paying jobs with fewer opportunities for career development and promotion, and are less likely to be eligible for automatic enrolment, all of which affect their ability to save adequately for their later life. The findings follow on from previous research into the gender pension gap.

The Pensions and Lifetime Savings Association (PLSA) Retirement Living Standards recommend that for a ‘moderate’ lifestyle in retirement, an individual should have £20,200 per year, or £29,100 per couple. When private pension income is combined with the State Pension and other benefits, most under-pensioned groups will struggle to achieve incomes above even the minimum retirement living standard of £10,200 per year for a single person and £15,700 for a couple.

People with disabilities are the only under-pensioned group who may reach the minimum retirement living standard once their income from the State Pension and benefits tops up their private pension savings to match those of the baseline population.

Auto enrolment has been a good start

Auto enrolment has been widely praised for its success in bringing more people into pension saving in the UK, yet there are millions of people still missing out. The policy was designed for traditional patterns of work and isn’t geared to help employees who take significant career breaks, work in multiple or part-time roles, or move frequently between jobs.

This exacerbates the widening savings gap and later life inequalities experienced by the most financially at-risk groups, many of whom are more likely to be excluded from auto enrolment.


NOW: Pensions policy proposals

Getting more people saving via automatic enrolment would be the most effective way to start closing the current savings gaps faced by the UK’s under-pensioned.

NOW: Pensions’ report makes policy proposals to close the current savings gaps for these groups to help boost financial equality in later life. The provider is also calling upon the industry to find and share ways to close these pension savings gaps and create a fairer pension system.

  1. Removal of the £10,000 auto enrolment trigger would get an additional 2.5 million people saving into workplace pensions.
  2. Pension contributions from the first £1 would increase pension wealth for these groups by an average of 30% – though for some groups such as single mothers this would increase by 52%.


If both policies were introduced, we would generate an additional £1.2 billion in annual pension contributions.


Lauren Wilkinson, Senior Policy Researcher at the Pensions Policy Institute, said: ‘Pensions saving is inherently a long-term process, with individual savings building up over the course of an entire working life and, as a result, policies aimed at increasing pension saving take time to embed and impact later life outcomes. It is vital that we have a way to measure and assess the progress of policies aimed at redressing inequalities in the pensions system and broader policy landscape that impact upon it. The Under-pensioned Index produced in this research provides a means of monitoring the gap between the retirement income of under-pensioned groups and the population average in order to identify where support may be most needed in order to improve later life outcomes.’


Joanne Segars, Chair of Trustees at NOW: Pensions said: “We were motivated to produce this report following our extensive work on the gender pensions gap and our ongoing collaboration with the Pensions Policy Institute. Some groups in the UK face huge savings gaps and those individuals who most need to save for later life are often the people who are effectively locked out of the current auto enrolment system.

“We need to improve retirement incomes across the board – and that starts with creating a level playing field so that everyone has the same opportunity to save for later life.

We want to thank all the organisations and charities who contributed to this report, as well as the people who provided our case studies by sharing their personal stories with us.

We hope that this report will help us raise the profile of these savings gaps and motivate the industry to find and share ways to close these pension savings gaps and create a fairer pension system.”


About Lisa Baker, Editor 2424 Articles
Lisa Baker is the Editor of Always Finance, and writes about Business, Finance Technology and Healthcare. Lisa is also the owner of Need to See IT Publishing.