Solutions to the UK’s biggest pension problems

Our just-published, market-leading Great British Retirement Survey, which draws on the experiences of nearly 8,000 people, reveals the biggest challenges facing UK pension savers and suggests a range of remedies. Joining Kyle to discuss the key findings is Camilla Esmund, head of investor campaigns at interactive investor.

The full 2026 report can be found here:

The women’s wealth & investing hub mentioned in the podcast can be found here.

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Kyle Caldwell, funds and investment education editor at interactive investor: Hello, and welcome to our latest episode of On The Money, a weekly podcast that covers investment and pension topics in a practical manner. 

In this episode, the focus is on some of the key findings from interactive investor’s market-leading Great British Retirement Survey. Our survey highlights the core challenges facing pension savers and outlines what we, at interactive investor, would like to see in terms of reforms to tackle some of the problems identified.

We’re going to focus on a handful of the key findings, but there’s much more covered in the full report, so please do check it out.

One of the key members of the team who puts a lot of time and dedication into compiling the report is joining me today, and that is Camilla Esmund, head of investor campaigns at interactive investor. Camilla, to start off, could you give a very brief overview of how long the survey’s been going for, how many people are polled, and why we do the survey?

Camilla Esmund, head of investor campaigns at interactive investor: Yeah. So, thank you for having me. I’m really excited to be talking about this research today because, as you say, it is market-leading. It’s one of the biggest pension surveys of its kind, and it’s around 8,000 respondents. So, 5,000 of those are nationally representative.

And then we have ii customers who fill in the survey as well. So, altogether, it’s such a powerful barometer of the pension landscape in the UK. Every year - it’s the seventh year we’ve done this now, the seventh iteration of the report - and every year it has the same goal. So, getting to the heart, as you say, of what’s troubling pension savers in the UK.

And there’s loads of food for thought for the industry in here and for policymakers, but we also designed this to be actionable. So, we want every individual saver and investor to be able to take at least one thing from this report that they can action to make them feel more in control of their financial future.

Kyle Caldwell: First, we’re going to cover some of the findings that lay bare the retirement realities that many people are facing. Among the findings from the survey are that people are retiring later than ever. The state pension is being heavily relied on in retirement, and there’s plenty of uncertainty regarding whether the amount you have in a pension when you retire is going to last the course. So, Camilla, over to you to run through those findings in more detail.

Camilla Esmund: Yeah. So, as you say, one of the core findings that really struck me was that four in 10 retirees simply don’t know if their retirement savings are going to last them. This is really concerning. Imagine having that looming over you during those years when you’re trying to manage that money. That’s a horrible feeling. So, that really, really stood out. 

And, as you say, people are working longer. There are many reasons why people may choose to stay in work longer or to go back to work. But, really, I think this is illustrative of this difficulty in planning, this uncertainty about whether they’ll be able to afford to retire. So that was something, again, that really stood out.

As you point out, there’s a very high reliance on the state pension. Around half of retirees are depending on the state pension for their main source of income. That’s really worrying because, obviously, the state pension can provide a valuable source of income in retirement, but alone it is unlikely to be enough for a comfortable lifestyle.

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Kyle Caldwell: Those findings that you just mentioned, Camilla, do make for a very sober read, and as well as retirees, they found that people who are decades, 20, 30 years away from retirement, they also have lots of financial worries and concerns about whether they can retire and whether they are going to have enough money to retire. There’s also uncertainty over the age they can retire.

One of the biggest problems people have is a lack of confidence in the pension system, and what really doesn’t help are frequent changes to the pension system in terms of pension rules and taxes. They both undermine trust, and that uncertainty does deter a lot of people from becoming more engaged with their pensions, and putting more money away for later life.

So, Camilla, we’ve got some thoughts on how this situation can improve, so over to you to explain.

Camilla Esmund: As you say, consistency really needs to be key. We continue to say that pension tax needs to be left alone. Every year in the survey, it gets louder, that need for clarity so that people can plan. Because as it stands, with all the chopping and changing, people don’t know what to do next.

Fundamentally, we continue to say that needs to happen. Especially, as you say, it could have the opposite effect and make people not want to engage with their pension or even think about it altogether, and also wonder what the point is. That’s the complete opposite of what we want. 

More specifically, we’d love to see the creation of a common national retirement income benchmark. Understandably, pension saving is not always going to be a top priority for everyone depending on their stage of life and it will vary.

But we need to meet people where they are and make it easier for people to track their progress because at the moment that’s really, really difficult.

That will help people understand not just their balance, but where they are in relation to their stage of life, goals and everything we just said in terms of the lifestyle that they want to have in retirement.

We would love the government, the regulators, the industry as a whole to agree on some common plain English benchmarking. This would show the income that people might need for a minimum, moderate and comfortable retirement in today’s money as well.

That would ideally be consistent across these key pieces of documentation that we see for pensions. So, whether it’s your statement, where you’re not just seeing your balance, you’re also being able to benchmark, or pension dashboards - I think this is why it’s so important to be talking about this now - which are coming down the pipeline.  We’ve got more of a timetable for that now and this is the opportunity to action some of these things because they could be visible there. Employer communications as well, there’s so many opportunities. 

We were conscious that that’s a lot to ask for, but it is the time to talk about it, I think.

Kyle Caldwell: In terms of pension dashboards, the first idea for them was mooted around a decade ago, because I remember writing about them. By 2026, you’d hope they would have launched in some form. However, that’s not yet happened and there’s been frequent delays over the years.

But when they are launched, it’s going to be really useful for people to see all their pensions information in one place. Long gone are the days of a job for life and most people have multiple different jobs throughout their working careers - I think the average is something like 11 or 12.

So, the ability to see lots of different pension pots in one place, and also get a forecast for the state pension, would be really helpful for people to engage and see whether they’re on track for where they want to be in retirement. As you pointed out, there’s no common industry-wide framework in terms of ballpark figures.

What’s the amount that people should aspire to for retirement? We do have figures from Pensions UK. It’s a really valuable resource for people. It breaks down what they think a comfortable, moderate, or minimum retirement [sum] should be both for a single retiree and a couple.

However, you need to bear in mind that these are estimates. They’re not personalised recommendations, and they also don’t include housing costs. So, if you’ve still got a mortgage to pay off or you’re going to rent in retirement, both of those are not factored in.

According to Pensions UK, for a comfortable retirement, it estimates you need £45,400 a year for a single retiree and £62,700 for a couple. For a moderate retirement, the estimates are £32,700 for one person and £45,400 for a couple.

For a minimum retirement, the figures are £13,900 for a single retiree and £22,500 for a couple. Of course, everyone’s needs and aspirations in retirements are different, but I think the analysis by Pensions UK is very interesting and provides food for thought.

The figures, particularly for a comfortable retirement, can be quite alarming. If you work out how much you’ve got in your pension and, say, you’re 10 or 15 years away from retirement, you can think, actually, there’s quite a big gap between where I am and those figures. However, what I would say is whether you’re five, 10, or 15 years away from retirement, it’s not too late to supercharge your pension savings by upping contributions by increasing monthly contributions or putting in lump sums if , of course, you’ve got the means to do so. 

But it’s also crucial to look under the bonnet at how your pension is invested and consider whether the asset allocation and risk level is appropriate. If you know at this point that you’re going to keep your money invested throughout retirement rather than buying an annuity, you’re still going to want the engine room of a pension portfolio to have plenty of exposure to growth-producing investments, which is what equities or funds invested in shares provide as opposed to derisking the portfolio into bonds.

However, the earlier you engage with a pension, the better. And on that front, we have a policy idea that we think could help give people a gentle nudge towards becoming more engaged in the form of wake-up packs at the age of 40. Could you explain the idea that we have, Camilla?

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Camilla Esmund: Yeah. As you say, improving consumer understanding, as we’ve spoken about and we’ll speak about more, is fundamental, so really, really key, and helping people track their progress.

But so is giving people that nudge in the first place. At the moment, wake-up packs are sent to people age 50, and this is good, but we’re arguing to bring it forward as well. So, let’s send them earlier, at age 40. The idea is essentially just giving people more time. More time to strategise, to check their pension, to do basically everything you’ve just said, assess how it’s invested, look at contributions, lots of things that we’ll talk about a lot today.

Ultimately, time is a great asset with these things. And, for us, it feels like a bit of a no-brainer to have those earlier.

Kyle Caldwell: The challenge at the midlife stage, which is a category that I fall into, is that you do have lots of competing priorities. You may be at the stage where you’re raising and supporting a family, you might be on the property ladder and have a big mortgage that you’re trying to pay off, and as a result, pension saving can take more of a backseat at this point.

Camilla Esmund: Our 40s, as we’ve been saying, can be a really important time to make a difference to our financial lives. We associate it with a time of our lives that could be our peak earning years. Interestingly as well, our broader data - so when you look at not just pensions, so self-invested personal pensions (SIPP) in this case because it’s looking at our platform, but also ISAs - this age group, that midlife group, tend to be our best performers [compared with] any other age group.

So, it shows that when this group are investing and staying invested, it’s paying off and they’re doing really well. But as you say, the reality is that it’s not that simple. Life throws things our way, we have all sorts of competing financial priorities at this time as well. 

It’s very thought-provoking what came through in the survey about debt. Our survey shows that rather than prioritising those longer-term financial goals, this age group are increasingly using pension money to firefight today’s costs and bills. In our survey, almost half of Gen X told us they now carry unsecured debt, and this is up from around 41% the year before.

Obviously, not all debt is necessarily bad, but the reason it’s relevant is because it’s having a knock-on impact on longer financial goals, and a lot of it being pensions.

People are spending down their pensions before they even retire. So, around 30% of Gen X told us that they use their 25% tax-free lump sum to repay debt, and 18% told us that they spent it on daily living costs, which is really interesting. Obviously, everything is so expensive at the moment.

It is very worrying because at the beginning of this podcast we talked about how many people aren’t sure if their retirement savings are going to last, and we can see why because a lot of them are having to spend this money before they even retire.

Kyle Caldwell: It’s widely known that many people are not saving enough towards their retirement. Due to the way in which the pension system has changed, both you and I [are] in defined contribution (DC) pensions in which the value of the pension, the success of it, is based on how the investments perform, how much money we put in and the employer contributions, as well as the valuable tax relief you receive.

Whereas in the past, older generations may have received a defined benefit (DB) or a so-called final salary pension, which provides a guaranteed retirement income for life based on your salary, age, and length of employment. Also with a defined benefit pension, how the stock market performs doesn’t impact that guaranteed income. 

Now, two ways we think could help younger people try and save into a pension earlier and to save more is by raising the minimum pension contributions under auto enrolment gradually to 12%, and also extending the minimum age of auto enrolment to 18. Could you run through those in more detail?

Camilla Esmund: Yeah. As you say, the retirement landscape has changed so much. The onus is very much on us as individuals to save enough, and as we’ve talked about a lot already today, that just isn’t happening. Auto enrolment has been a great success story, but it can go further, we think.

The first idea is around raising minimum pension contributions but gradually, and the emphasis is on gradual because there are so many cost pressures on employers, on employees, so this needs to be realistic, sustainable, and not put any other pressure on that front. So, very gradual.

Right now, the auto-enrolment minimum sits at 8% of qualifying earnings, and we think it’s time to look at this again and see if we can start moving towards 12% gradually, maybe 1% a year, say, with an ambition of eventually maybe even increasing that further. 

The second idea is extending auto enrolment down to age 18. At the moment, it only kicks in around age 22. But the idea behind this is to just give a little bit more time. If we can get people investing into their pension from their very first pay packet, if they are indeed starting work earlier, this gives sometimes decades longer for this money to grow and benefit from compounding.

Obviously, it’s an auto-enrolment scheme but people can still opt out and I think this is why we still need that underpinning robust financial education framework to give people that context and help them understand why these can be beneficial, but also what choices they have.

Kyle Caldwell: As you mentioned, you can opt out of auto enrolment, but if you had financial education explaining concepts like investment compounding and how that’s a real force for good...

Camilla Esmund: Especially earlier...

Kyle Caldwell: ...over the long term then that’ll help people not opt out. That’s the big hole that needs addressing, financial education. We’ve been banging this drum for a long time at interactive investor, we’d like to see financial literacy added to the national curriculum. 

There has been improvement in the industry in terms of reducing the amount of jargon, but I think it can go much further. Also, just trying to make the understanding about investments more engaging for people as well. I think that’ll help improve confidence and interest.

On a personal note, I’d like to see lots more education around pension default funds because the reality is it’s a default fund. It doesn’t mean it’s necessarily going to be appropriate for you based on your age and risk level.

I’m at an advantage because I work in this industry. When I was put into a pension default fund before I chose where I was going invest my pension, it had 60% in shares and 40% in bonds. I was 22 or 23 and I don’t think I needed to have that much exposure to bonds at that age.

The reality is a lot of people don’t engage with their pension. They leave it in the default fund, and their money could be working a lot harder for them and it could be invested in a more adventurous manner, particularly in your 20s and 30s.

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Camilla Esmund: Yeah, absolutely. I’m so glad that we’re seeing a lot more noise on financial education at the moment. As you say, it’s something that ii has been so vocal on for such a long time. There’s not only a real clear need for it, but there’s also a real appetite for it across generations.

I should add that this survey is across multiple generations. We’re not just looking at people who are near retirement, we’re also looking at some young savers as well at the beginning of their investment and savings journey. So, it’s loud and clear across ages that people want to learn.

All those ideas that we’ve both outlined need to be underpinned by this education framework, so that people can understand why it’s relevant and have that context.

Financial jargon just put such an unnecessary block on people engaging with their investments. It’s come a long way and we’ve really done a lot in that space as a business, but it’s got a long way to go.

On default funds specifically, it’s worth saying that these are designed for quite a broad range of savers. As you say, Kyle, really you need to understand whether it serves you and your stage of life. Ideally, your pension can adapt with you. So, whether you are near retirement and your strategy needs to adapt and, say, de-risk or whether you are younger and can afford to take on a bit more risk, you need to be able to reflect that in your investments.

A lot of the problem at the moment is that people don’t know that they are in these default funds, and they don’t know what it means for them and how it aligns with what they need. So, we would love to see more education on this. I know it’s something that we have written about but I would really encourage people to try and see how their fund is invested, and if you’re not sure, if it’s not clear, ask the questions.

Kyle Caldwell: Another big pension problem that we highlight in the report is the gender gap. Now, while it is widely known that this is a problem, the findings from the survey really do show how alarming it is.

Camilla Esmund: Yeah. It’s incredibly alarming, and it’s very stubborn as well. The gender investment gap more broadly is an issue, but pensions are such a key driver of it. There’s a whole chapter on this in the report. I definitely encourage people to read it.

But in a nutshell, as it stands, men on average, by the time they reach retirement, have around £130,000 more than women. So, women are being left very financially exposed and this is very concerning.  

The gap is well researched, it comes down to lots of structural barriers when it comes to women’s ability to build wealth, career gaps and the so-called motherhood penalty, the historic pay gap as well. There are so many things, and you could almost do a whole conversation just on that. But the frustrating thing about it is that I think it feels very out of control for a lot of people. These are all factors we can’t really do too much about individually. 

But the good news is there are things that women can do to plug these gaps and take matters into their own hands. 

So, everything we’ve just spoken about, first of all making people aware of this data, and this is why I’m so passionate about sharing it because I hope this gets women talking. I hope that women read this and share some of the findings with their friends. You have to be aware of the problem and get people talking to really change things, especially if you’re younger as well and you’ve got all that time on your side. But it’s worth looking at whether you can do some of the things we talked about.

So, obviously, do what’s right for you and what’s affordable at that time and what makes sense, but have a look at your contributions. Could you afford to put a little bit more in? Have a look at how your pension is invested.

One of the great things you can do as well, which doesn’t take any new money or any extra funding, is to round up lost or missed pensions. As you said earlier, lots of us have had multiple jobs and it’s easy to lose track of old pensions. So, something that can make you feel more in control is to track them down, which you can do via the government tracing service, or you can contact old employers as well to find old pensions. 

Then, from that, you know exactly what you have and you can potentially look at bringing them together or consolidating them. Then you’ve got one pot that you can track in terms of performance a bit better, how it’s invested, fees and things like that, and that could be a really effective thing to do as well. But obviously, don’t lose any valuable guarantees in the process.

Also just look at your financial toolkit more broadly because our retirement and our future pots are more than just our pensions. They kind of have to be because of everything we’ve talked about. 

So, use other tax-efficient vehicles as well to your advantage. So, whether that’s an ISA, for example, to bolster your pension savings. The great news is that consistency is key and you don’t have to be putting away large lump sums.

If you are consistently putting away small amounts too, especially over a long time frame, then it can really pay off.

We have lots of educational tools and insights on something called the Women’s Wealth and Investing Hub, which is on the interactive investor website.

So, if this resonates with you, if this data resonates, or you know a partner, a sister or a mum, I’d really encourage you to encourage them to have a look at this hub because it’s full of articles to talk about some of these steps in more detail.

You can also explore the gap more broadly, why it exists, why it hasn’t changed, what needs to be done. There’s lots of great data from what women are doing with their money as well, which can help be a really valuable source of inspiration.

So, yes, hopefully, that’s something that women can take away from this.

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Kyle Caldwell: As you outlined, Camilla, the fact that women take time out of work to look after children, and there’s greater tendency for women to take more time out of work than men to look after loved ones, that has a huge impact on pension wealth later on due to the fact that there’s less money going into a pension at that point, and there’s less money in the pot to compound over time. 

So, if you’re taking time out of work in your 20s or 30s - we know that with investment compounding the earlier you invest, the better - and if that money’s not being put in at that point, then it’s not going to work as hard for you.

Camilla Esmund: Yeah, exactly. I’d really encourage young women especially to have a look at some of this data and at some of these tools and insights because hopefully that will get them excited about thinking about these things early, which can make a real difference and offset these gaps that sometimes pop up because of these structural challenges.

Kyle Caldwell: In terms of how men invest versus women, our data shows there’s actually a lot of similarities rather than differences. 

Camilla Esmund: Yep, so many similarities. This isn’t just pensions either. When you look at our broader data across ISAs and SIPPs on ii, men and women are both investing successfully over the long term. This is really encouraging.

You can basically play spot the difference, there’s minimal differences. But men tend to have a slightly higher weighting to direct equities and women have a very slightly higher weighting to collectives more broadly, but primarily investment trusts. 

But really, it’s very similar and this helps us move away from some of these unhelpful generalisations when we talk about how men and women behave when it comes to money and attitudes to risk and instead focus on what’s actually happening. That both men and women are investing, they’re building well-balanced portfolios for the long term, they are seeing that portfolio grow over the long term. 

The more we can share that, especially as we’ve just said, with women who are starting out maybe or who want to bolster their investments, they can learn from the success of what women are doing and see that some of it isn’t complicated. It’s just going back to those fundamentals around diversifying and staying in the game, just staying invested. That will help inspire more, hopefully.

Kyle Caldwell: Just before we conclude this episode, we’ve looked at pension pitfalls and highlighted some potential remedies, however, we haven’t focused on some of the positive aspects of the report. So, let’s end on a more cheery note, Camilla. Over to you to pick out the positive findings in the survey.

Camilla Esmund: Yes, there are definitely reasons to end on a cheery note because there are positives coming through in the data as well. 

Broadly, we can see that investors are getting control by doing some of these things that we’ve talked about. So, consolidating pensions, for example, has gone up year on year, and that’s risen again. People are getting more fee-savvy as well. That’s brilliant because pension fees are notoriously quite difficult for consumers to understand. 

So, it’s great that savers are looking under the bonnet of what they’re being charged because that can make a huge difference to your pot if it’s eating into it over time.

And there are some really encouraging behaviours coming through from younger generations as well. Millennials and Gen Z are talking about money, investments and pensions a lot earlier than previous generations did. That’s hugely encouraging because that’s all in turn going to help drive more engagement and awareness earlier, as we’ve said. So, hopefully we see more of this in future surveys.

Thank you to everyone who filled in the survey as well because we really appreciate the insights. Without it, we wouldn’t be able to pull such a meaningful report together. Hopefully, we’ll see the policy landscape begin to adapt. But, ultimately, I hope that there’s at least one thing a saver and investor can take away from this report, and action tomorrow.

Kyle Caldwell: Camilla, thank you for coming on the podcast to run through some of the key findings.

Camilla Esmund: Thank you for having me.

Kyle Caldwell: And thank you for listening to this episode of On The Money. As ever, we love to hear from listeners. If you’ve got an idea of a topic you’d like us to cover in a future episode, then please do get in touch by emailing otm@ii.co.uk. As ever, you can find lots of investment inspiration on the interactive investor website, ii.co.uk, and the podcast will be back again next Thursday.