What the updated Retirement Living Standards mean for interrupted pensions saving
The newly reinstated Pensions Commission has launched its interim report, Pensions 2050: Evidence and Future Priorities (2026), which points to the long-term risks that threaten future retirement outcomes.
Factors such as the ageing population, rising ill-health, and the number of groups who are under-saving, including the self-employed, women, carers, disabled people and some ethnic minority groups, are impacting employees’ financial security.
Falling short of the pensions minimum standard
Earlier this month, Pensions UK updated its Retirement Living Standards (RLS), which aim to help people picture what lifestyle they expect in retirement and the costs associated with three different levels.
The annual standards, calculated by the Centre for Research in Social Policy, Loughborough University, now show that a minimum retirement lifestyle costs £13,900 a year for a one-person household and £22,500 for two people.
Zoe Alexander, executive director of policy and advocacy at Pensions UK, said: “The latest update to the Retirement Living Standards underlines a clear reality for many people, today’s saving levels will not be enough for the retirement they expect. It is expected that around 82% of people will reach a minimum standard of living, but far fewer will go beyond that.
“That is out of step with what people expect for their future. Without action, too many risk facing a cliff-edge drop in income when they stop work. The government is right to be considering whether minimum contributions need to rise through the work of the Pensions Commission.”
In 2023, more than 22 million people were saving into a workplace pension compared to just over 10 million in 2012. The introduction of pension automatic enrolment has positively impacted pension participation, however, the Commission’s findings show that this has not been sufficient to achieve adequate retirement outcomes for millions of people.
This echoes the findings of REBA and Aviva’s roundtable report, which finds that working lives are becoming more complex, more pressured, and far less linear, resulting in reduced pension savings.
Download the full REBA roundtable Impact of ill-health and career breaks on pension adequacy report to find out more about:
- The mental health pressures driving long- and short-term absence and the impact on pension savings
- How financial strain risks are undermining future retirement adequacy for younger generations
- The major factors in pension opt-outs and how to support individuals
- The actions employers are taking to help employees achieve retirement adequacy
- How organisations can move towards a more preventative approach to employee wellbeing and health support to aid pension adequacy.
Supplied by REBA Associate Member, REBA
Supporting the reward and benefits community to pursue best practice and drive excellence in their strategies
