Pension Pot Needed for Basic Retirement Soars by 60%

By Rachel Ellis Partner & Regional ER Manager &

    Jazmeer Jackson Employment Rights Lawyer

Recent research reveals that the average pension pot needed to secure a basic standard of living in retirement has jumped by 60%, rising from £68,300 in 2020-21 to £107,800 in 2023-24. This sharp increase, driven by the ongoing cost-of-living crisis, means that many workers are facing significant challenges when it comes to saving enough for their retirement. 

The report, commissioned by the Living Wage Foundation, shows that workers earning the real Living Wage need to save around £2,800, or 12% of their salary, annually to build up a pension pot sufficient to meet their retirement needs. This is a significant burden for low-paid workers already grappling with rising everyday costs. The reality is that more and more workers are questioning if they’ll ever be able to retire comfortably—if at all. 

More Workers Are Feeling the Pressure 

A recent poll by the Living Wage Foundation found that over half of workers—53%—feel they may never be able to retire, while 62% expect they will need to work several years beyond the typical retirement age. These fears are even more pronounced for those on lower wages, with 65% of workers earning below the real Living Wage saying they doubt they’ll ever be able to stop working. Women and renters are also more likely to feel anxious about their retirement savings, with 58% of women feeling they will never be able to retire compared to 47% of men Meanwhile, 59% of tenants feel they will never be able to retire compared to 48% of homeowners.  

"Living Pension" accreditation  

The Living Wage Foundation has launched a "Living Pension" accreditation to help tackle the issue. This scheme encourages employers to offer better pension contributions, so their workers can build up a retirement pot that meets basic needs. Living Pension-accredited employers commit to contributing a minimum of 7% or £1,630 of their employees' earnings towards their pension, providing a pathway for workers to build a stable financial future. 

What You Can Do 

If you’re worried about your retirement, you’re not alone. Rising costs are making it harder than ever to save, and many of us are facing tough choices between meeting today’s needs and planning for the future. However, there are practical steps you can take: 

• Check Your Pension Contributions: Make sure you understand how much you’re saving and whether it’s enough to meet your retirement needs. The Living Pension guidelines can be a useful benchmark. 

• Get Support: If you’re part of a union, speak to your representative about how you can push for better pension support in your workplace. If your company hasn’t yet joined the Living Pension movement, consider raising the issue.