More than a third (38%) of UK employees with a defined contribution pension fear they will never be able to afford to retire due to the impact of increased living costs, according to new research from financial wellbeing and retirement specialist WEALTH at work.
The study, which surveyed 2,000 UK employees, highlights the growing challenge many face in balancing everyday living costs with saving for later life.
Concerns about retirement adequacy are widespread. Over four in five (83%*) employees say rising living costs will leave them less comfortable in retirement due to a shortfall in pension savings, up from 81%* last year, indicating a worsening financial outlook for many people. This realisation could be why over a third (36%) say they would like more information about how much they need to retire comfortably.
Additionally, 82%* are concerned they will need to work longer to make up for a shortfall in pension savings, up from 80%* in 2025, reinforcing expectations that retirement may be delayed.
When asked about their total workplace pension contributions (including both employee and employer payments), 41% of employees said they are saving at or below the minimum 8% auto‑enrolment contribution.
A further 29% are contributing slightly more, between 9% and 11%, while only 20% are saving 12% or more – the level recommended by the Living Pension benchmark for a minimum standard of retirement living.
Worryingly, 10% don’t know how much is being contributed to their pension at all, highlighting low levels of engagement.
Overall, this suggests that the majority of employees are contributing below the level aligned with the Living Pension benchmark. Despite this, 45% believe they are saving enough, highlighting a clear gap between perception and reality when it comes to retirement preparedness.
Financial pressures are highlighted as a major barrier to saving more. The research shows that 33% of employees say they cannot afford to increase contributions at present. However, 30% plan to increase contributions in the future and 25% would like support on how to do this, indicating a clear opportunity to help employees take practical steps to improve their retirement outcomes.
The findings from WEALTH at work underline that day-to-day financial pressures during people’s working life can limit their ability to save, making it harder to achieve financial security in retirement. Without earlier intervention, these pressures can compound over time and leave individuals increasingly vulnerable later in life.
Jonathan Watts-Lay, Director, WEALTH at work, comments: “Many people are understandably worried about whether they’ll ever be able to afford to retire. When meeting day-to-day living costs become difficult, it’s often long-term savings that take a back seat. But even small changes early on can make a huge difference over time, particularly when combined with employer contributions and investment growth.
“One of the problems is that pensions can feel complex and distant, making it easy for people to disengage. That’s why ongoing support throughout someone’s working life is so important. The earlier individuals engage with their finances, the more options they’re likely to have later on. Workplace financial education plays a critical role, giving people the knowledge and confidence to make informed decisions early and consistently.
“This can include practical guidance on how to save when budgets are tight, such as managing day-to-day finances, budgeting effectively and making the most of workplace benefits. It can also mean helping people understand how much to contribute, the benefits of increasing contributions over time, making the most of employer matching, and reviewing investments regularly. It’s always worth speaking to your employer to see what support they provide.”
*Combining answer options “Very concerned” and “Somewhat concerned”