Scottish Widows has warned a pension crisis looms with millions risking poverty in retirement and adding an eye-watering £32 billion to the Labour Party government’s benefits bill.
Millions of workers risk retiring in poverty – which could further add pressure on the taxpayer. Scottish Widows has warned a pension crisis looms with millions risking poverty in retirement and adding an eye-watering £32 billion to the Labour Party government’s benefits bill.
According to Scottish Widows, around 15.3 million people currently save into a defined contribution pension. Worryingly, 20 per cent of these savers are heading towards poverty in retirement.
The research found that 23 per cent of savers, approximately 3.5 million people, will face housing costs when they retire. The Pension and Lifetime Savings Association says that a basic standard of retirement means having around £50 a week for food shopping, taking one UK holiday a year, and putting aside about £100 a month to keep your home in decent shape.
READ MORE Heinz scraps popular condiment with shoppers baffled by ‘strange’ decision
At this level, owning or running a car is off the table—it’s just not affordable. Worryingly, the number of people at risk of falling short of this basic benchmark has risen to 39%, up from 35% in 2023.
That’s a noticeable jump in just a year, and it’s raising concerns about growing financial insecurity among those approaching retirement age.
Pete Glancy, of Scottish Widows, said: “The average private rent in the South East is about 100 per cent of the average pension incomes and in London, it’s 130 per cent.
“We need to help more people get on to the property ladder when they’re younger, and for those who will never achieve that, we need an adequate supply of social housing to bring those rental costs down.
“If we don’t, the benefits bill for the country is going to increase significantly at a time when the country can least afford it.”
Jonathan Watts-Lay, of retirement specialists Wealth At Work, warned that benefits were a “minefield” that not everyone can navigate.
“The whole benefits system is very, very complex. There will be a lot of people out there that don’t understand which benefits they can apply for,” he said.
Watts-Lay continued: “My concern is that there will be some pensioners that are eligible for benefits that will go without and history tells us that is the case.”
