The parts of the UK where nearly half of workers face retirement poverty

Millions of workers across the UK could be heading towards a bleak retirement, with new research warning that huge numbers may struggle to cover even the basics.

Fresh analysis suggests that in some regions, nearly half of adults risk falling into retirement poverty.

According to a study by Scottish Widows and Frontier Economics, 15.3 million people across the country are on course to fall below minimum retirement standards.

The problem is most severe in Northern Ireland and North East England, where 48 per cent of residents could fail to meet the £13,400 a year needed for a basic single-person retirement, as set out by the Pension and Lifetime Savings Association.

The research compared projected pension incomes with essential living costs across every UK region, exposing sharp divides in how prepared people are for later life.

The South West is close behind at 46 per cent, while 44 per cent of people in Wales and 42 per cent in the West Midlands could also struggle.

In London and the North West, around 41 per cent of residents face falling short in retirement, compared with 39 per cent in Scotland. The East Midlands stands at 36 per cent, while Yorkshire and the Humber and the South East are both at 34 per cent.

The East of England fares best, but still almost a third of people (32 per cent) risk not meeting even basic retirement standards.

The study compared people’s pension savings to the official benchmarks for living costs in retirement. To cover just the basics, a single person needs around £13,400 a year, while couples outside London need about £21,600.

The Government’s online state pension forecast tool is especially useful for checking if voluntary contributions could increase future payments | GETTY

This only includes essentials like food, bills and housing, not extras such as holidays or leisure.

By contrast, the full state pension currently pays £11,973 a year, leaving a gap of around £1,400 for individuals aiming for even the most basic standard.

For a more comfortable lifestyle, the sums rise sharply: £31,700 a year for single retirees and £43,900 for couples for a moderate lifestyle, and £43,900 and £60,600 respectively for a fully comfortable retirement.

The problem is many people don’t have enough workplace or private pensions to make up these gaps, and some don’t even qualify for the full state pension, worsening the shortfall.

Only 39 per cent are currently on track for a comfortable retirement income | GETTY

Susan Hope, retirement expert at Scottish Widows, highlighted the urgent need for action on regional inequalities. “The differences between people’s pension prospects across the UK are stark and highlight the scale of the challenge to crack the pensions crisis,” she stated.

Hope emphasised the geographical divide: “Across towns, cities and rural communities, people are facing very different futures. The postcode divide needs to be urgently addressed.”

She acknowledged the difficulties facing savers: “The everyday pressures on people’s money doesn’t make this an easy task, so we need to help them to feel empowered to make decisions about their future.”

Based on the Scottish Widows and Frontier Economics analysis, here’s the regional breakdown of retirement poverty risk across the UK:

• Northern Ireland – 48 per cent
• North East – 48 per cent
• South West – 46 per cent
• Wales – 44 per cent
• West Midlands – 42 per cent
• London – 41 per cent
• North West – 41 per cent
• Scotland – 39 per cent
• East Midlands – 36 per cent
• Yorkshire and the Humber – 34 per cent
• South East – 34 per cent
• East of England – 32 per cent (lowest, but still nearly 1 in 3)

| GETTY

Hope stressed that even modest actions could prove significant: “Small steps now will make a big difference in the future.”

Several strategies exist for workers to improve their retirement prospects. Maximising workplace pension schemes proves crucial, with employers required to contribute at least 3 per cent when employees pay in 5 per cent of their salary.

Many employers offer enhanced matching contributions beyond these minimums.

Tracking down missing pension funds could provide substantial boosts to retirement income. Currently, £31.1 billion sits unclaimed in forgotten or inactive pension accounts across the UK. Free online services and applications can assist in locating these lost funds through former employers.

Deferring state pension claims offers another avenue for enhancement. Each year of delay increases eventual payments by 5.8 per cent, potentially yielding thousands in additional income for those able to continue working and in good health.

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