Around 9 million people aged 25 to 54 are not on track for an adequate retirement, including around 5 million aged between 40 and 54, according to research from Legal & General.
The research, carried out by Public First and based on more than 8,000 respondents, forms part of L&G’s “Decades Ahead” programme and introduces a new measure of retirement adequacy, Minimum, Replacement, Rent, which looks at income, living standards and housing costs.
According to L&G, this group faces a particular challenge, having missed out on both traditional defined benefit pensions and the early benefits of auto-enrolment. Many also started saving later, with 19 per cent only beginning after age 35, leaving less time to build up a pension pot. The average pot for a 47 year old is £27,000, but drops for renters and part time workers.
Around one in five people in this group face an inadequate standard of living in retirement and believe they will be worse off than their own parents and current retirees.
The key factors are cost pressures, caring responsibilities, insecure work and health issues.
L&G says there is still time for many to improve their position, with potentially decades left to save. More than 200,000 defined contribution members have already used its Guided Retirement Planner since late 2024.
The provider says broader factors such as housing, employment and financial education will need to be addressed, with its programme focusing on working with policymakers, employers and non-profit organisations to improve long-term financial wellbeing.
L&G group chief executive officer António Simões says: “Pensions are a cornerstone of the UK economy. They help drive growth and, more importantly, they shape people’s futures for the decades ahead. But a comfortable retirement doesn’t happen by accident. It’s built over a lifetime of saving. Just as pension savings compound over time, so too can inequality and missed opportunities.
“Our new research highlights the scale of the challenge, particularly for today’s midlifers. Millions are not on track for the retirement income they will need but, as importantly, our analysis shows it’s not too late to make a meaningful difference for those people.
“There are many reasons for pensions inadequacy, both structural and attitudinal. That’s why L&G is taking a new approach, bringing together industry, policymakers, civil society, employers and savers, to recognise a nuanced picture and drive collective action. We’re committed to stepping up to this complex challenge, through the support we offer our customers, and by helping shape a system that delivers better long-term outcomes for everyone.”
Public First director Andrew Harrop says: “Public First and L&G are working together to deepen our understanding of the pension and saving challenges facing people in work today. This research introduces a new, more comprehensive, measure of retirement income adequacy by assessing whether people can secure a minimum acceptable income and replace an appropriate share of their pre-retirement earnings, after housing costs.
“Only around half of people in the core decades of working life are on track to meet this new standard. We are particularly concerned about people in midlife, many of whom are reaching 50 with very little saved and with deep pessimism about their financial future.
“However, the findings also show there are real opportunities to improve outcomes. Employers, policymakers and civil society all have an opportunity to address the current shortfall. There may still be a long way to go to secure retirement security for all but the challenge is far from insurmountable.”
