Pension poverty hits half of adults living with health conditions

June 4, 2026

Research from Scottish Widows’ latest Retirement Report highlights the impact of poor physical and mental health on people’s ability to work and prepare for retirement.

While three in five UK adults (60%) expect to be fit enough to continue working until their planned retirement age, three in 10 (29%) have seen their work impacted due to their physical or mental health over the past five years.

For some, this has led to significant changes in working patterns, including stopping work altogether (10%), reducing working hours (7%) or moving into less demanding or lower-paid roles (6%).

Health doesn’t just affect working life – it shapes retirement outcomes too. Lower earnings and disrupted careers can reduce pension contributions, limit savings, and make it harder to budget and plan confidently for the future.

Half (50%) of UK adults with physical or mental health conditions that impact their day-to-day lives face pension poverty, according to the latest National Retirement Forecast (NRF) projections*. This is double the rate of the general population (27%).

Half of those in poor health face pension poverty

The report also highlights a gap in preparing for later-life care. A third (34%) of adults have not yet considered care needs in later life, while over half (51%) are not confident they would be able to afford care if required.

The picture is even more concerning for those living with a mental or physical health condition, among whom two-thirds (67%) lack confidence in their ability to pay for any care they may need in later life.

Susan Hope, pension expert at Scottish Widows, commented: “Navigating health challenges is something which many of us will have to face in our later years. Whether it’s managing a chronic condition, mental burnout, or working through menopause, physical and emotional struggles often force people to change their working patterns, cut back their hours or drop out of the workforce altogether.

“This just doesn’t affect our day-to-day lives, it often knocks our long-term financial plans off track too. The good news is that you don’t need to completely overhaul your life today to make a meaningful difference for tomorrow. Small changes really do add up. Taking just ten minutes to check your pension balance, using an online calculator to see what you might need, or finding out if your employer matches extra contributions can give you more control.”

There are no easy answers to these challenges, but several strands are important:

Earlier and greater pension savings

Relatively low savings and the current automatic enrolment default mean many are, or will be dependent, on continuing to work to avoid pension poverty, which is jeopardised if they become ill. Earlier and greater savings can therefore provide a stronger financial cushion for retirement and reduce the impact of later ill health.

Reducing the protection gap

The FCA has recently called out the significant ‘protection gap’ including low update of insurance products, like critical illness cover and income protection, which can provide a financial lifeline when earnings are interrupted. Closing that gap could reduce the financial impact for many who experience poor health.

Tailored guidance and support

Some of the challenges associated with poor health stem not just from unstable jobs and income for some, but from difficulties with planning, budgeting or financial decision-making for others. Further focus from industry and government is required to understand how best to guide and support those with poor health.