UK workers doubt pension will fund comfortable retirement

Penfold has published research showing that 43% of UK workers do not believe their current pension will fund a comfortable retirement. The survey also found that 86% of employers would still offer workplace pensions even without a legal requirement.

The findings highlight a gap between employer support for pensions and employee confidence in retirement saving. The research was based on surveys of 2,000 UK employees and 500 small and medium-sized businesses across the UK.

Employers appear to be placing greater weight on pensions as part of their benefits offer. The study found that 65% now view pensions as a core employee benefit or competitive advantage, rather than a compliance obligation.

That support has not reassured many staff. More than a quarter of employees, 26%, said thinking about their pension makes them feel anxious or confused, while only 17% described themselves as very confident about their retirement.

The figures suggest automatic enrolment has widened pension participation without resolving concerns over whether contributions will be enough. Penfold’s analysis found that many workers still struggle to understand what their savings mean for their future income.

Confidence gap

The research also pointed to signs of disengagement among some savers. Around 13% of employees said they had reduced, paused or stopped their pension contributions during the past 12 months.

For employers, the issue does not appear to stem from broad dissatisfaction with their pension providers. Employers gave providers satisfaction scores of between 84% and 88% for payroll integration, account management, responsiveness to queries, compliance support and technical expertise.

Even so, half of employers said their pension provider makes pensions more complicated than necessary. That suggests administrative satisfaction does not always mean employees find the product easy to understand.

Chris Eastwood, Chief Executive Officer and Co-Founder at Penfold, said the findings show a mismatch between employer intent and employee understanding.

“It’s good to see that employer intent is strong in delivering quality, impactful workplace pensions schemes. But the way pensions are delivered and communicated is currently not resonating with employees,” said Chris Eastwood, Chief Executive Officer and Co-Founder at Penfold.

He said employers increasingly see pensions as part of attracting and retaining staff, but workers remain uncertain about the outcome those savings will deliver.

“The encouraging news is that employers are taking pensions seriously,” Eastwood said.

“They recognise that delivering quality, impactful pensions is an important part of attracting and retaining staff.

“The worrying part is that many employees still don’t believe those pensions will give them the retirement they’re hoping for. Our data points to a fundamental issue: despite the now-widespread provision of pensions, many workers still lack clarity about what their savings mean for their future,” he added.

Communication problem

The research adds to a wider debate over whether pension adequacy has become the next challenge after enrolment. While more people are saving through workplace schemes, contribution levels and engagement remain uneven, particularly among lower and middle earners facing pressure on household budgets.

Penfold’s data suggests many employees see pension saving as distant and opaque, rather than as a financial asset they can actively manage. That matters because confidence appears closely linked to whether savers understand the likely outcome of their current contributions.

Eastwood argued that the industry still fails to show people clearly what their pension is worth and what retirement income it may produce.

“For most people, a pension is one of the biggest financial assets they’ll ever own. Yet too many people don’t know what it’s worth, what income it could provide or whether they’re on track.

“Today’s workforce expects financial tools that are transparent and easier to engage with. When pensions are difficult to understand or disconnected from day-to-day financial decisions, the everyday worker is far less likely to feel confident about their future,” he said.

He added that clearer links between contributions and future income could improve engagement and prompt action from savers.

“Confidence increases significantly when people can clearly see how today’s contributions affect tomorrow’s retirement. They’re more likely to stay engaged, enabling more responsive changes in behaviour and creating meaningful steps to restore control and confidence in their future,” Eastwood said.

Employer role

The survey suggests employers may need to focus not only on offering a pension, but also on how it is explained. If staff do not understand the value of the benefit, the pension may do less to support retention or financial wellbeing than employers expect.

For smaller businesses in particular, where pension provision has often been viewed mainly through the lens of compliance, the findings indicate a shift in attitude. A large majority of employers now say they would keep offering pensions voluntarily, yet employee confidence remains low.

Eastwood said the next step is to close that information gap.

“Good employer intentions alone aren’t always enough. Whilst it’s great to see that the motivation is there, addressing the information gap is the clear next step in making those pensions feel meaningful. When people understand where they’re heading, they’re far more likely to feel confident about getting there,” he said.