Go back to insightsAre today’s mid‑lifers heading towards a retirement shortfall?
New research suggests that as many as five million people aged 40–54 could face significant challenges in retirement.
The UK retirement landscape has changed dramatically over the past half‑century:
- In 1978, the State pension shifted from being largely a flat‑rate benefit to a combination of a flat‑rate element and, for employees only, an earnings‑related component.
- Over time, the earnings‑related State pension went through numerous reforms, generally increasing benefits and government costs, before being replaced in 2016 by the current flat‑rate State pension.
- During the 1970s and 1980s, final salary (defined benefit, or DB) pension schemes were common in both the public and private sectors, while personal pension plans were largely restricted to the self‑employed.
- Over subsequent decades, DB schemes steadily declined. By 2025, only around 3% of private sector DB schemes were still open to new members, and roughly three‑quarters were no longer building up benefits even for existing members.
- From October 2012, automatic enrolment (AE) into workplace pensions was gradually introduced, reaching its intended steady state in April 2019. Today, workplace pensions of various types cover around four in five employees and workers, but not the self‑employed.
This history has created a potential gap for people who entered the workforce in the roughly 15 years from the turn of the century. Outside the public sector, most would not have had access to final salary pension schemes, and many will have spent part of their early working lives with little or no pension provision until they were brought into a workplace scheme through automatic enrolment.
New research from one of the UK’s largest pension providers suggests that this theoretical gap has become a real one. It identifies a generation born between the early 1970s and the late 1980s who were too young to benefit from widespread DB schemes, but too old to gain the full advantage of automatic enrolment. As a result, around five million mid‑lifers, currently aged 40–54, are not on track for an adequate retirement. Those most at risk include part‑time workers, renters and individuals who have taken career breaks, who collectively account for around 9% of the UK adult population.
The research does, however, point to a way forward. For many in this age group, there are still at least 13 years before reaching State pension age, meaning that increasing contributions now could materially improve retirement prospects.
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30th April 2026