The latest FCA Financial Lives, released today, finds that in 2024, a third (33%) of DC pension holders said they had less than £10,000 in DC pension savings (down from 40% in 2020), 56% had a combined pot of £10,000 or more (49% in 2020), and 12% did not know.
Only a third (33%) of DC pension holders have thought a lot about how they are going to manage in retirement, and almost 4 in 10 (38%) don’t know how much they or their employer are contributing.
The FCA’s research also shows that one in four people in the UK have low financial resilience, meaning that they have missed payments, are struggling to keep up with commitments, or don’t have savings to help them through difficulties.
In 2024, 60% of all DC pension holders aged 45+ agreed that their DC pension(s) alone would not be enough to live on in retirement.
Richard Sweetman, Senior Consultant at leading independent consultancy Broadstone, comments: “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.”
