Almost a third (31 per cent) of UK adults – an estimated 12.2 million people – are at risk of pension poverty in retirement, according to Scottish Widows, although this marks an improvement from 39 per cent (15.3 million people) in 2025.

This year’s research, Retirement Report 2026: Planning your future in a changing world, used National Retirement Forecast (NRF) projections and Pension UK’s Retirement Living Standards (RLS) benchmarks as part of its analysis.

The report followed the government’s reintroduction of the Pension Commission, intended to explore ways to improve the UK’s retirement outcomes.

The improvements from last year reflected changes to the RLS benchmark for a 'minimum' lifestyle, partly driven by falling energy costs over the previous 12 months.

In addition, those without a pension had increased their level of savings elsewhere, and more expected to own their own home.

The report said these factors highlighted how exposed those on lower retirement incomes are to external pressures beyond their control, particularly energy prices, which are again coming under strain amid ongoing unrest in the Middle East.

Scottish Widows made several recommendations within the report including increasing default pension contributions under automatic enrolment (AE) from the 8 per cent currently to 12 per cent.

The analysis found that increasing default contribution rates had a sizable impact on the defined contribution (DC) pension pots of those currently saving, with an even greater impact for younger people (aged 22-29) who had more years of retirement saving ahead.

For the under 30s, applying the 12 per cent uplift across total salaries brought pension poverty down from 32 per cent to 13 per cent.

Scottish Widows head of pension policy, Pete Glancy, said the report painted a complex picture.

“While the fall in pension poverty compared to a year ago is a step in the right direction, this shift in retirement fortunes is complex and the current state of the nation's savings is still polarised," he said.

“The factors we can control, like how much we save or how much we expect to receive in retirement, may improve, but can easily be thrown off course by shifting external factors like increases to energy and general cost of living.”

Other recommendations within the report included introducing an automatic enrolment equivalent for Britain’s 4.5 million self-employed, as well as ensuring accelerated compatibility between pensions and personal finance products, and better decision-making support.

“We must also ensure that choosing flexibility today – through self-employment or part-time work – doesn’t come at the expense of tomorrow,” Glancy continued.

“Extending automatic enrolment to the self-employed, as is one of our recommendations to the Pension Commission, is critical and should be implemented at pace to close this gap in retirement saving.”

He added that most people were unlikely to have enough in their pension pots alone to fund their desired retirement, so pensions should not be viewed in isolation.

“Considering pensions alongside other savings, investments and housing wealth – and advancing the Government’s Open Finance agenda – will be key to improving retirement outcomes for all,” he said.

In response to the research, Raindrop co-founder & CCO, Vivan Shridharani, said there were some key steps people should prioritise to maximise retirement savings, such as starting to save early and increasing pension contributions.

“But this is easier said than done as living costs remain high and millions of people face below-inflation wage growth,” he added.

Shridharani urged savers to track down lost pension pots, warning the issue was particularly acute among younger people (aged 18-34), with fewer than a fifth (17 per cent) who could identify where all their pension pots were, and many unsure how much they had set aside for retirement.

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