A new report shows that nearly 9 million people have private pensions with incomes between 3,650 and 6,750 PS per year. This is between 43 and 80 percent the average national private pension income, which is PS8,500.
In the report by now:pensions (part of long-term saving specialist Cardano Group), carers and ethnic minorities, people with disabilities, woman, divorced mothers, single mothers, independent workers, and multiple jobholders are identified as being most affected. The report by now:pensions, part of the long-term savings specialist Cardano Group, identifies a href=”https://hrreview.co.uk/hr-news/strategy news/workers with caring responsibilities risk a pension shortfall/381825″ rel=”noreferrer noopener” target=”_blank”>carers/a>. Also identified as most affected are women (divorced women), ethnic minority groups, single mothers and single mothers), ethnic minorities, ethnicity groups, a>https://hrreview.co.
Auto-enrolment has brought more than 11 millions people into workplace pension schemes since 2012. Many underpensioned people do not meet the eligibility criteria, such as income or job type requirements, and so they are denied benefits.
The report recommends that policy be changed to address structural problems that prevent pension savings from being consistent and adequate throughout a working life.
Shortfalls for carers, minorities and people with disabilities
Since the report of 2022, the number of people who are carers or come from ethnic minorities has increased. However, their pension income is still below the average. Their pension savings are between 62 and 80 percent the UK average.
The group most affected by this is the disabled, whose private pension income is only 43 percent of national average. The average pension for disabled people is PS8,500.
These groups, despite improvements in employment and automatic enrolment continue to face barriers which limit their ability to contribute consistently towards pensions, including irregular work patterns, lower earnings on average, and exclusion from eligibility criteria.
Gender pension gap persists despite enrolment progress
The report shows that the percentage of women eligible for auto-enrolment increased from 77 to 85 percent between 2020 and 2025. Women are still retiring on private pensions that are only 67% of the UK average.
Pension incomes for single mothers are only 54 percent of average. Women who have divorced also fall under this category. This gap can be addressed by including pension savings as part of divorce settlements.
Joanne Segars is the Chair of the Trustees for now:pensions. She said that “without further policy action millions will continue struggling to achieve a secured retirement.” We propose key reforms including the removal of the PS10,000 earnings trigger for auto-enrolment, the scrapping of the lower earnings cap on pension contributions, and the introduction of a family caregiver’s top up.
Reforms needed to reduce the pension gap
Self-employed people are also under-pensioned. Their pension income is only 54 percent of that of the UK. They are often excluded from workplace pension schemes, and less likely to contribute privately.
John Adams, Senior Analyst at PPI, and the author of the report said: “Changes in automatic enrolment could lead to huge savings on pensions, for example, allowing income from multiple jobs to be combined or removing earnings trigger altogether.”
The report suggests five policy measures: the removal of the PS10,000 earnings threshold, the scrapping of the lower earnings limits on pension contributions; the introduction of a family caregiver’s top-up; the consideration pension assets when settling divorces and the increase in action on childcare costs.
