Pensions UK has published the latest iteration of its Retirement Living Standards (RLS), revealing that pension savers will need more money in retirement for their expected lifestyle amid rising living costs.

The standards, calculated by the Centre for Research in Social Policy, Loughborough University, are updated annually and aim to help people understand what they will need to save for different lifestyles in retirement.

For a minimum retirement lifestyle, pensioners will need £13,900 a year for a one-person household and £22,500 a year for two people, up from £13,400 and £21,600 respectively.

Meanwhile, the moderate RLS has risen from £31,700 to £32,700 for one-person households, and for two-person households it has increased from £43,900 to £45,400.

The comfortable RLS has also risen, from £43,900 to £45,400 for one-person households and from £60,600 to £62,700 for two-person households.

Pensions UK said the figures reflected increased everyday costs across spending categories, including food, essential household bills, and transport, alongside social activities and hobbies.

The association expected approximately 82 per cent of the working population to meet the minimum RLS, while just 23 per cent were forecast to reach the moderate standard and 9 per cent were expected to reach the comfortable RLS.

It warned these expectations were out of line with what some savers anticipated for their retirement, and without higher levels of saving there was a risk many would face a significant drop in income when they stop working.

Housing costs are not included in the RLS, as they vary depending on location and circumstances, with Pensions UK stressing it was important people used the standards as a guide and adjust them to reflect their own situation.

“The latest update to the RLS underlines a clear reality for many people, today’s saving levels will not be enough for the retirement they expect,” said Pensions UK executive director of policy and advocacy, Zoe Alexander.

“It is expected that around 82 per cent of people reaching a minimum standard of living, but far fewer will go beyond that.

“That is out of step with what people expect for their future. Without action, too many risk facing a cliff-edge drop in income when they stop work. The government is right to be considering whether minimum contributions need to rise through the work of the Pensions Commission.

“In the meantime, tools like the RLS play a crucial role by helping people take control and understand what they might need, so they can put more money away where and when they can.”

Loughborough University Centre for Research in Social Policy co-director, Professor Matt Padley, added: “We know that many people are not saving enough for retirement, but we also know that for some people it is simply impossible to save any more – you can’t save money you don’t have.

“By providing a living standards benchmark, the RLS can help us to think through the roles of the state, employers and individuals in ensuring everyone is able to have at least a minimum standard of living in retirement.”

Pensions UK’s development of the RLS is supported by the ‘Friends of the RLS’, who help fund the research to keep the standards up to date: LCP, L&G, Mercer, Railpen, Retirement Line, Royal London, Standard Life, TPT Retirement Solutions, Travers Smith, USS, West Midlands Pension Fund, and WTW.

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