One in three people in Britain face hardship in retirement

Over one in three people in Britain could struggle to afford basics such as food and heating in retirement, according to an annual forecast by Scottish Widows. 

The report found that 35% of people are projected to face this type of hardship, with a wide sweep of people including women, ethnic minorities, renters, and disabled people particularly likely to be affected.

Scottish Widows, a life insurance and pensions company, publishes its national retirement forecast once a year to project how people currently aged 22-65 will fare once they retire. 

The report found that women will on average receive a third less in pension incomes in retirement than men, with £12,000 and £19,000 per year respectively. Women are disproportionately represented in lower paid and part-time jobs, in which it is more difficult to build up a good pension pot. This is also the case for ethnic minorities and disabled people.

The report also found that the average full-time employee is on track to receive £27,000 a year in pension income – nearly three times the forecasts for the average part-time employee and the average self-employed person, at £11,000 and £10,000 respectively.

 “Our new national retirement forecast paints a stark picture,” Pete Glancy, Scottish Widows’ head of policy, said in a statement. “This year the pressure seems to have intensified due to increasing inflation and interest rates continuing to climb.”

Glancy picked out three solutions for tackling retirement poverty: 

• The government should implement long-term reforms, such as ensuring that automatic enrolment can support those on lower incomes. 
• Employers should do more to address the workplace inequalities faced by disadvantaged groups like women, disabled people and the LGBTQ+ community.
• The financial services industry must get better at reaching diverse groups, to ensure that people of all incomes and demographics know how to save for retirement.

The report highlighted how people in Britain are set to have dramatically different experiences in later life. While 35% of people were found to be at risk of having less than the minimum needed in retirement, a similar proportion (36%) were on course for a “comfortable” lifestyle, with enough money to cover various luxuries.

In forecasting people’s anticipated lifestyles, the report’s authors recognised that pensions are not the only factor in the incomes that people have in retirement.

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