Retirement confidence amongst UK adults has hit a new low ahead of the Autumn Budget, according to the latest UK Retirement Confidence Index from Nucleus, which revealed a growing sense of pessimism about retirement prospects.

The report found that the overall Retirement Confidence Index score now stands at 4.2 out of 10, down from 4.6 in 2024 and 6.9 in 2023, continuing a "worrying" downward trend in confidence across all age and gender groups.

The 45-54 and 35-44 age groups had the lowest confidence at 3.2 and 3.4, respectively.

In addition, it found that just over a quarter (26 per cent) of adults are confident that they will have enough money to live comfortably for the rest of their lives, down from 34 per cent last year.

The research suggested that retirement confidence has been particularly shaken by changes and speculation around pensions and tax, especially in the lead-up to the budget.

According to the report, nearly half (44 per cent) of adults said they were worried about pensions being brought into scope for inheritance tax from April 2027, and three in five (59 per cent) were concerned about possible cuts to tax-free pension lump sums.

In addition to this, less than a fifth (16 per cent) believe that the new Pensions Commission will make a meaningful positive difference, highlighting a lack of faith in long-term policymaking.

Widespread concern about the future of the state pension is adding to this uncertainty, as more than half (54 per cent) of UK adults believe it won’t exist in its current form within ten years, while a quarter (25 per cent) think it may disappear altogether.

Understanding of how the system actually works also remained low, with nearly half (44 per cent) of respondents believing their National Insurance contributions go into a personal pot to fund their own pension.

“The state pension remains the cornerstone of retirement income for millions, yet confidence in its future is collapsing," Nucleus technical services director, Andrew Tully, warned.

"People deserve clarity and consistency. They need to know what they’ll receive and when. Without that certainty, it’s almost impossible to plan effectively for the rest of their lives.”

Given this, Nucleus emphasised the need for stability, arguing that rebuilding trust will require a stable policy framework that removes pensions from short-term political cycles and stops using pensions as a political lever.

“We’re seeing a deep erosion of trust in the retirement system. Constant tinkering with pension rules makes long-term planning feel pointless. The [Pensions Commission] is a step in the right direction, but confidence won’t return until people believe the rules will remain stable," Tully said.

"We need clear communication and a joined-up approach across pensions, housing and savings to give people the certainty they need to plan properly for the future.”

There was also evidence that early education and access to advice could boost confidence, as a "striking" 68 per cent of respondents said they would feel more confident about retirement if they had learnt more about financial planning, pensions, and investing at an earlier age.

In particular, 42 per cent believe people should start planning in their 20s, a view shared across all age groups.

Confidence is also closely linked to engagement with advice, as those who have taken professional financial advice score significantly higher than those who rely on free guidance (4.4) or manage their own finances (4.9).

Indeed, Nucleus found that UK adults who receive professional financial advice report a retirement confidence score of 5.5 out of 10, "well above" the 4.2 national average.

"Empowering people to understand pensions, investment, and tax from a young age would make an enormous difference to future confidence," Tully stated.

"But it’s equally important that adults can access affordable, trusted advice to help them make informed decisions at key stages in life.”

Knowledge and awareness were not the only challenges, however, as Nucleus also highlighted continued cost-of-living pressures, revealing that 43 per cent of UK adults do not contribute to a pension, with 41 per cent citing the rising cost of living as the main barrier to saving more or anything into their workplace or private pension.

Gender differences were also seen, as the gender confidence gap widened again this year, with men recording an average confidence score of 4.6, compared to 3.8 for women.

The report also found that whilst defined contribution (DC) and workplace pension membership is broadly level between men and women (37 per cent and 36 per cent respectively), women are far less likely to have other forms of savings.

Nucleus highlighted this as evidence of both the financial disadvantage women face and the urgent need for more targeted communication and support to close the gap in retirement preparedness.

Tully said: "The gender gap in retirement confidence is a clear warning sign. Women are saving less, have fewer financial products, and are less confident about their long-term prospects.

"We need more targeted communication, flexibility in saving options, and a concerted effort to make financial planning more inclusive so women aren’t left behind.”
 

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