About 35% of the UK population could face poverty in retirement, according to Scottish Widows’ 19th annual Retirement Report.
Widows said the report’s new National Retirement Forecast (NRF) establishes the “clearest picture ever captured of the UK’s future retirement landscape, using the Pension and Lifetime Savings Association (PLSA)’s ‘Retirement Living Standards’ levels to calculate the quality of lifestyle that people are set to achieve when they stop working.”
The NRF compares the retirement lifestyles within reach for different ages, ethnicities, genders and employment statuses.
Widows said that in forecasting savers’ anticipated lifestyles, the NRF “recognises that factors other than pensions play a role in the income people will rely on in retirement and also accounts for housing costs.”
By surveying societal segments in large numbers, Scottish Widows said it has pioneered the most inclusive picture of UK savings to date.
The survey found that many societal groups – such as renters and young people – are “disproportionately facing hardship, while others such as millennials are saving well for retirement.”
It found that 35% of people may struggle to afford food and heating in retirement due to the current economic climate.
The NRF indicates “significant polarisation” with 36% heading for a comfortable retirement compared to the 35% projected to struggle.
Pete Glancy, Head of Policy at Scottish Widows, said: “Our new National Retirement Forecast paints a stark picture – one in three (35%) of us are facing the harsh reality of a retirement where we will struggle to make ends meet.
“Last year’s Retirement Report highlighted the impacts of the pandemic, cost of living and wage stagnation. This year the pressure seems to have intensified due to increasing inflation and interest rates continuing to climb.
“The solution needs to be threefold. We are calling on the Government to help end retirement poverty by implementing long-term reforms, such as ensuring that automatic enrolment can support those on lower incomes.
“Secondly, businesses need to do more to address the inequalities faced in the workplace by disadvantaged groups like women, disabled people and the LGBTQ+ community.
“Finally, the financial services industry must get better at effectively communicating with diverse groups to build trust and ensure that people of all incomes and demographics understand how to save effectively for retirement.”