UK workers fear retirement shortfall and seek government action

Only a minority of UK employees believe that their pension will support them in retirement, leading many to demand more action from the UK government to secure their financial future.

Research conducted amongst 2,000 UK employees reveals that just 21% are very confident that their pension pot will sustain them in retirement. One third (35%) fear their pensions savings will offer inadequate support and just 3% believe the State pension will be a sufficient source of income.

Despite this, data, published by Herbert Smith Freehills Kramer, also shows 13% of employees - equivalent to almost 4.5 million people in the UK* - are not currently saving into a pension, or don't intend to do so.

"For years we have been told that huge swathes of the population will rely on the 'bank of Mum and Dad' to be financially secure, but with an ageing population, we are more likely to see 'reserves of relatives' being used to finance retirement," says Samantha Brown, UK and EMEA managing partner of HSF Kramer's pensions practice.

Against this backdrop it is clear that UK employees think politicians should do more to ensure people are saving for their so-called 'golden years'. A significant proportion (41%) argue that it is Government's responsibility to supplement the State pension, whilst 20% say that Government should act because the option to opt out of auto enrolment may cause problems in later years.

Other key findings include:

• carefree youth: just 18% of those aged 18-24 have a private pension, despite a similarly small proportion (20%) believing they can rely on the State pension in later years
   
• sustainable savings: almost three-quarters (73%) claim that it matters to them that their pension funds invest in ethical or sustainable companies. However, more than one-third are not willing to accept lower returns on their pension if it meant their money was invested more ethically
   
• cashing it in: acknowledging that up to 25% of a pension can be taken as a tax-free lump sum upon retirement, 42% plan to take the remainder immediately as a lump sum or in the first few years of retirement. Asked why, 25% said they prefer the security of 'cash in hand,' with the same proportion also suggesting they would prefer to spend in the early years, post-retirement
   
• AI advice: 29% admit they would turn to AI or social media for pensions savings advice, with one-third (35%) turning to friends or family. Almost half (42%) use Pension Wise, the government's free-to-access service, for guidance on pensions options.

"A significant portion of the population seems to be taking a casual approach to long-term financial security. Yet this approach risks ensuring funds will be adequate to meet retirement needs, putting pressure on schemes to manage greater uncertainty and potential shortfalls. For trustees and providers, this means a heightened need to educate members, monitor fund health, and prepare for more complex financial planning and risk management," adds Brown.

Respondents were also asked about different elements of pensions provision. Almost one-third (30%) said theirs was a Defined Benefit (DB) pension, whilst 44% claim to be members of Defined Contribution (DC) schemes. Just 33% actively choose where their pension is invested, whilst 37% leave the decision to their provider or employer.

"Tackling the retirement savings gap will require a multi-pronged approach: expanding access to workplace savings schemes, improving financial literacy, and encouraging consistent long-term contributions. The key to success lies in exploring innovative strategies and advocating for policy reforms that help build more resilient retirement outcomes for future generations,” concludes Brown.

* figures based on Labour Force Survey data from August 2025 stating that 34.21 million people are currently in employment in the UK (https://commonslibrary.parliament.uk/research-briefings/cbp-9366/), with the calculation being 0.13 x 34,210,000 = 4,447,300.

The data is based on a survey of 2,000 individuals aged 18-65 in full- and part-time employment. Respondents were drawn from a variety of industry sectors and from across all regions of the UK.