Around 33 per cent of people with defined contribution (DC) pensions had less than £10,000 saved in 2024, down from 40 per cent in 2020, according to the FCA’s latest Financial Lives report.
According to the report, over half or 56 per cent had £10,000 or more, and 12 per cent didn’t know how much they had.
Additionally, only 33 per cent of DC pension holders have given serious thought to how they will manage in retirement. Around 38 per cent don’t know how much they or their employer contributes to their pension.
The report also found that one in four people in the UK has low financial resilience and among DC pension holders aged 45 and over, 60 per cent said their pension won’t be enough to live on in retirement.
Broadstone senior consultant Richard Sweetman says: “The latest FCA Financial Lives Survey highlights a worrying trend of under-contributions and a lack of engagement among Defined Contribution (DC) pension savers. While some progress has been made in the last four years, it’s clear we’re still only scratching the surface when it comes to improving financial resilience and retirement planning among savers.
“With more and more people relying on their DC pots in their later years – rather than Defined Benefit (DB) pension – the importance of early and regular contributions is paramount to securing a financially stable retirement.
“Auto-enrolment has done a great job of bringing more people into workplace pension schemes, but it cannot be a reason for complacency.
“Employers must take an active role in promoting the long-term financial health of their employees. Simply increasing contributions is not a silver bullet – especially given the current economic pressures and cost-of-living constraints. However, employers and providers can make a huge difference by encouraging savers to engage with their pensions, helping them understand their retirement needs, and ensuring DC schemes deliver robust, risk-adjusted returns and value for money.
“Having relied on inertia to increase pension participation, we should now use that same inertia to gradually raise contribution rates. If we don’t, many savers risk falling far short of the standard of living they desire in retirement.”
