Today State Street Global Advisors published its 2025 Global Retirement Reality Report which captures the views of nearly 1200 defined contribution pension savers in the UK and explores their attitudes towards retirement.
Commenting on the findings, Alistair Byrne, Head of Retirement Strategy at State Street Global Advisors, says:
“These findings present a mixed picture. It’s clear that some of the challenging dynamics in the UK retirement landscape persist. The majority of UK savers do not feel confident about their retirement, and that there is a clear lack of understanding on how much is needed to live their desired lifestyle. As the needs of pension savers evolve, the support, education and structure of the UK’s retirement system must continue to evolve too — otherwise, we risk a generation of workers being left behind.”
“With that said, there are some positives in the research. Increasingly, pension savers are conscious of how their funds work for them and how they’re invested by managers – for example, we see support from many UK savers for their money to be invested locally, a specific provision of the government’s Pension Investment Review. Work is underway to ensure that the UK’s retirement system supports hard-working savers through to retirement, and it’s vital that these needs are heard and prioritised.”
Key findings of this year’s report
Retirement confidence is slowly increasing but there is still a long way to go
- Optimism is increasing from a low base. One in five (20%) say they are optimistic that they will be financially prepared for retirement by the time they plan to stop working (up 6% from 2023). The same number (20%) are confident about being able to retire when planned (up 7% from 2023).
- But for most savers, concerns persist. Over half (52%) are not optimistic about being prepared for retirement, and 50% are not confident they will be able to retire when planned.
- 30% say their outlook on when and how they might retire has changed, with the top factors negatively affecting confidence including inflation and increased cost of living, the economy, and the political climate.
Investing in the UK vs. maximising returns
- 65% of UK respondents would like their retirement savings invested in a way that maximises returns – regardless of where it is invested.
- However, this isn’t the case for everyone.
· 31% say would like their retirement savings to be invested in their local area
· 30% say they would like their retirement savings invested partially in the UK economy to boost economic activity – even it if means lower overall returns
· 24% would save more into their pension if they knew it was being invested in the UK
Is the UK’s retirement calculator broken?
- The top concerns of the UK savers when it comes to retirement are lack of certainty on the level of savings they will need (66%), not having the ability to generate a consistent income throughout retirement (62%) and outliving their savings (54%).
- When asked what percentage of their current annual income they think they’ll need to maintain their desired lifestyle during retirement, the average response was 56%.
- According to the ONS, the average UK salary in 2024 was £37,430, where 56% would equate to approximately £20,960. This is lower than recommended by the PLSA, which calculates that £31,700 is needed annually for a ‘moderate’ retirement and at least £43,900 for a ‘comfortable’ retirement.
The UK’s ‘DIY’ approach to retirement
- UK savers are less likely to work with an independent or employer sponsored financial adviser compared to savers in other countries. Only 21% work with an IFA, compared to 28% of savers in Australia, Ireland (36%), Canada (27%) and in the US (38%).
- Amongst those who do not work with a financial advisor, the most common reasons are that fees are too high (44%) and that they are confident they are able to manage their finances and investments on their own (43%).
- Is this approach working? 42% say they don’t know what they plan to do with their retirement savings when they retire. This is a much higher figure than those in the US (22%), Ireland (24%), Australia (27%) and Canada (35%).
