The UK has a pension problem. It's not a secret — the government's own data confirms it. The state pension in 2025-26 pays £11,502 per year to those with full National Insurance records. The PLSA's Retirement Living Standards suggest a comfortable retirement in the UK requires £37,300 per year for a single person. The gap between those two numbers is the individual's problem to solve.
Why the Gap Exists
For most of the 20th century, UK workers retired with defined benefit (DB) pensions — final salary schemes that paid a guaranteed income for life, regardless of investment performance. These have been largely replaced by defined contribution (DC) schemes, where the income in retirement depends on what you contributed and how those contributions performed.
The shift places the investment risk entirely on the individual. It also requires individuals to make complex decisions about contribution rates, investment allocation, and drawdown strategy — decisions that most people have not been trained for.
Auto-Enrolment: Progress, But Not Enough
Auto-enrolment, introduced in 2012, has significantly increased workplace pension participation. Millions of workers who would not have joined a pension scheme are now contributing. But the minimum contribution rate — 5% from the employee, 3% from the employer — is widely acknowledged to be insufficient for a comfortable retirement.
Research from the Pensions Policy Institute suggests that minimum auto-enrolment contributions need to roughly double to close the savings gap for median earners. Most people are not aware of this.
What You Can Do
Three actions make the most difference: contribute more than the minimum as soon as your income allows; consolidate old workplace pensions into a single SIPP so you know what you have; and invest your pension contributions rather than leaving them in the default fund, which is often too conservative for younger savers with long investment horizons.
The state will provide a floor in retirement. Whether you're comfortable above that floor is your responsibility — and the earlier you take it seriously, the less it costs.
Wealth8's SIPP gives you transparent, low-cost access to a range of investment portfolios within a pension wrapper. You can see exactly what you're holding, what you're paying, and what your projected retirement income looks like at current contribution rates.
