Millions of UK workers are facing an uncomfortable truth: they won’t have enough to retire on.
The headlines are clear. Nearly 40% of workers may struggle to meet even basic retirement costs*. Almost half of working-age adults aren’t contributing to a private or workplace pension. And while 89% of eligible employees are now enrolled in workplace pensions, most are not saving enough to enjoy a moderate or comfortable retirement**.
Participation is improving. But adequacy remains a major problem, and it’s a problem employers can help solve.
At WellFi, we believe that financial education is the key to closing the gap between “saving something” and “saving enough.” When employees understand the long-term impact of their financial decisions, particularly when it comes to pensions, they’re far better equipped to build lasting security.
The Numbers Tell a Stark Story
The UK state pension is set at £11,973 a year for 2025/26. That’s below the £13,400 annual income needed for a minimum retirement lifestyle, according to the Pensions and Lifetime Savings Association. A comfortable retirement? You’d need about £43,900 per year.
Yet too many people still rely solely on the state pension or assume that minimum workplace contributions will be enough.
Despite increases in pension contributions and participation over recent years, largely due to auto enrolment, for many workers, especially lower earners and part-time staff, contributions are far too low to meet future needs.
Why starting early and saving enough matters
One of the most powerful levers in retirement planning is time. Starting early allows compound growth to work its magic. Even small contributions in your 20s and 30s can grow into significant retirement pots by the time you reach your 60s.
Research from Legal & General estimates that lowering the auto-enrolment age from 22 to 18 could boost retirement savings by 15%. Yet many people opt out in early adulthood or delay increasing contributions until much later in life, often when it’s harder to catch up.
This isn’t just a behavioural issue. It’s an education issue.
Education builds confidence and action
According to Wealthify, only 5% of Brits can correctly answer basic financial questions, including those about pensions. That gap in understanding can lead to inaction, missed opportunities, and fear-based decision-making.
When employees know:
- How pensions work
- What they’re likely to need in retirement
- How contributions (including employer support and tax relief) add up over time
they are more likely to engage, contribute more, and plan ahead.
Studies show that financial education increases both participation and contribution levels.
Today’s Pressures, Tomorrow’s Problems
We understand why pensions can feel like a “tomorrow” problem. The cost of living crisis is making it hard enough for people to meet today’s needs, let alone save for the future.
With rising costs for housing, energy, and groceries, many employees are focused on immediate needs—keeping the fridge stocked, covering rent, or managing childcare. Some are taking on second jobs or turning to credit just to make ends meet. In that context, pension contributions can feel like a luxury.
At the same time, the shift from defined benefit to defined contribution pensions means the responsibility – and the risk – now sits with individuals.
This is exactly why financial education is so urgent.
People can’t make informed trade-offs if they don’t understand the long-term consequences. Financial literacy helps employees budget, prioritise, and take small, positive steps, even during tough times.
And starting small is better than not starting at all.
How employers can lead the way
Employers are in a unique position to drive change. By embedding financial education into the employee experience, you can shift mindsets, reduce stress, and promote long-term wellbeing.
Here’s what effective support looks like:
- Regular, jargon-free pension education that demystifies contributions, tax relief, and compound growth.
- Clear communication about the value of employer contributions, including matching schemes and total reward.
- Access to wider financial education and tools to navigate budgeting, debt management, and pension planning, helping employees balance short-term priorities with long-term goals.
Research from the Money and Pensions Service shows that financial education doesn’t just improve financial outcomes – it boosts morale, productivity, and retention, too.
Final Thought: The Sooner, The Better
We often say “saving something is better than nothing” – and that’s true. But for millions of people, “something” still won’t be enough. The sooner we shift the conversation from simply participating in pensions to truly understanding them, the better.
Financial education empowers people to take control of their future. Employers who invest in this support aren’t just ticking a benefits box, they’re helping to build a financially secure, resilient workforce.
At WellFi, we help UK companies deliver practical, engaging financial education that drives real behaviour change, ensuring employees are equipped to save early and save enough for a brighter future.
Contact Us to find out how we can support your team.
Sources:
*Money Week
** Pensions Age
