8.6 million 'underpensioned' groups have between 18% and 64% lower retirement savings than the UK average

The study found that underpensioned groups - including people with disabilities, carers, people from ethnic minorities and single mothers - have private pension savings ranging between 18% and 64% lower than the UK average.

A number of factors were found to present barriers to saving, including non-traditional working patterns, a lower percentage of homeownership, and being impacted by inequalities in the labour market and an over-reliance on the state pension.

The “Underpensioned Index 2022”, created by Now Pensions and the Pension Policy Institute (PPI), reveals the savings gap, which has widened since the start of the pandemic.

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Of the 14.6 million employed women in the UK, around 2.5 million (17%) do not meet the qualifying criteria for automatic enrolment (AE), compared to 8% of male employees. 

1.9 million women earn below the earnings threshold of £10,000, making up 79% of the workers who do not meet this qualifying criterion.

Single mothers’ private pension incomes have remained at 50% of the population average, while for women in general and carers the gap has narrowed slightly.

The groups are now calling for the government to step in to address the pensions gap, including by removing the £10,000 trigger for AE and getting rid of the lower earnings limit so contributions are on every pound of earnings, rather than those after the qualifying sum of £6,240.

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Lauren Wilkinson, lead researcher at the Pensions Policy Institute: “The current economic climate could exacerbate the underpensioned gap, making it more challenging to implement further policies to narrow the gap in the short term, but it is important that the underpensioned challenge is approached with a long-term view.”

Samantha Gould, Head of Campaigns at NOW: Pensions and report author: “There are a total of 8.6 million people in underpensioned groups that are locked out of automatic enrolment, missing out on potentially billions of pounds of pension saving annually. We have been campaigning on behalf of underpensioned groups since 2019. 

"Our latest report has revealed that private pension incomes were less than 85% of the population average, with some groups experiencing significant declines compared to our 2020 index.

"Whilst the current economic environment means that it is challenging for the government to implement potential remedies, doing nothing is not an option. Action is needed now to reduce the pensions gap and allow everyone to enjoy the comfortable retirement they deserve.”

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Joanne Segars OBE, Chair of Trustees at NOW: Pensions said: “Since it was introduced ten years ago, auto-enrolment has transformed how millions of people in the UK save for their pensions.
 
"Yet for far too many in our society, a comfortable retirement remains out of reach, usually through no fault of their own. These groups are often locked out of the auto-enrolment system, unable to earn enough to put money aside for later and, as a result find themselves on the wrong side of a growing pension savings gap."