Millions of people in the UK are heading towards retirement with private pension incomes far below the national average, leaving them financially vulnerable and more reliant on the State Pension, according to a new report by now: pensions and the Pensions Policy Institute (PPI).
The 2025 Underpensioned Report finds that disadvantaged groups — including women, carers, people with disabilities, ethnic minority groups, single mothers, and the self-employed — typically retire with pension savings between 45% and 67% of the population average. On average, a person with a disability retires with a private pension income of just £3,650 a year, compared to the wider UK population average of £8,500.
Joanne Segars, Chair of the Trustee Board at now:pensions, said:
“The findings released in our report come at an important time. They are a stark reminder that a wide cross-section of society is still being left behind”.
Disability, Gender, and Carers Among Most Affected
People with disabilities remain the most underpensioned group, achieving just 43% of the private pension income of the general population.
Single mothers also fare poorly, reaching just 54% of the average, while divorced women are particularly exposed to financial risk in later life.
Despite improvements in employment rates for carers and ethnic minority groups, overall pension outcomes for these communities still lag well behind the population average.
The report also highlights how gender inequality continues to persist. Women, despite now being more likely to be eligible for auto-enrolment than five years ago, still retire with around two-thirds the pension wealth of men.
On average, women would need to work an additional 19 years — to the age of 86 — to close the gender pensions gap, the report suggests.
Progress — But Big Challenges Remain
While some progress has been made — notably improved pension eligibility for carers and rising employment among certain ethnic minority groups — systemic barriers remain entrenched.
Carers, for instance, still face significantly lower employment rates compared to the general population. The report shows that just 61% of carers are in work, compared to 76% of the wider population.
Similarly, the self-employed — a group that has grown sharply in the UK — remain particularly vulnerable, with just 20% currently saving into a pension.
Five Policy Proposals to Close the Gap
now: pensions is calling for urgent action from government and policymakers, setting out five key reforms:
- Remove the £10,000 auto-enrolment earnings trigger, to include more low-paid and part-time workers.
- Scrap the lower earnings limit on contributions, so all earnings count.
- Introduce a family carer’s top-up, providing National Living Wage-equivalent pension contributions for those taking time out to care.
- Ensure pension savings are considered in divorce settlements.
- Expand affordable childcare provision, enabling more parents to return to work and save for retirement.
Samantha Gould, Head of PR and Campaigns at NOW: Pensions, said:
“While progress has been made in bringing more people into pension saving, significant inequalities remain. Many underpensioned groups—including women, carers, disabled people, and those in non-traditional employment—continue to face systemic barriers that limit their ability to save for later life. These individuals are more likely to earn lower wages, work part-time, or take time out of employment for caring responsibilities, all of which contribute to lower pension savings and greater financial insecurity in retirement.
The Underpensioned Report 2025 paints a picture of a pensions system still not reflecting the realities of modern, diverse working lives. As the population ages and cost-of-living pressures grow, addressing these pension gaps is becoming increasingly urgent.
The full report is available at nowpensions.com.
