Pension Statistics in the UK to Hang up Your Hat On

Let’s face it—none of us is getting any younger, regardless of what Instagram filters will have us believe. It’s hard to think about what our lives will be like decades down the line, but time waits for no one, so we must start setting money aside for retirement as early as possible.

If you’re interested in giving your finances a makeover to make sure they look good even in the winter of your life, browse through these pension statistics in the UK to get a sense of what you’ll need to do.

Let’s get crackin’!

Some Essential Pensions Info to Help You Retire in Style

General UK Pensions Facts and Statistics 

1. There are about 12 million pensioners in the UK.

(PPI) (Centre for Ageing Better)

Pension statistics in the UK tell us that the population group aged 65 or over is large and steadily growing. There are more than 11.9 million persons in this age bracket in the country as of 2020, with 3.2 million being 80 and over. According to Pension Policy Institute projections, the number of pensioners in the UK will exceed 13.3 million over the next decade.

2. In 2018, 35% of Brits didn’t have a pension. 

(FT Adviser)

After they reach the State Pension age (SPa), most people receive a regular payment from the government called a State Pension. However, in a 2018 survey, about a third of people in Great Britain reported not having a pension, while 36% didn’t have a clue how much money they had in their pension savings.

3. In 2018/19, the average State Pension amount in the UK was £176 a week.

(GOV.UK)

According to the DWP’s annual report, the average State Pension amount in 2018/19 was £176 per week per person. That isn’t much, is it? Luckily, you can supplement this income through a private pension plan.

4. 69% of pensioners have a private pension income.

(GOV.UK)

Even though more than two-thirds of pensioners invested in a private pension scheme in 2018/19, the average UK pension from one was £175 a week, unnoticeably higher than the average income from the British State Pension.

Only 7% of Britain’s retirees, on the other hand, received a private pension income of £750 or more per week. Put simply, if you want to be comfortable in your twilight years, you’ll need to have some extra money coming in addition to the UK government pension scheme.

5. The average pension in the UK per week is £361.

(GOV.UK)

The average income of all pensioners in 2021 was £361, but there was a major difference between retired couples and singles. Namely, those who were coupled up had £511 a week in joint pension income at their disposal, in sharp contrast to their single counterparts, who had just £246. Furthermore, unattached retirees were far more likely to rely heavily on benefit income (including a State Pension) at 57% than paired-up ones at 36%.

6. The Pension Protection Fund is keeping your retirement money safe.

(GOV.UK)

Most pension pots are managed by pension providers, not the company you work for. If your employer goes bankrupt and your pension provider is unable to pay you, the Pension Protection Fund will compensate you 100% if you’ve reached your agreed-upon retirement age. If you’re younger than that, you can get compensated up to 90%.

7. The earliest age at which you can usually withdraw cash from your pension fund is 55.

(GOV.UK)

If you decide to dip into your pension pot before you’ve turned 55 and it’s unauthorised, you’ll have tax implications of up to 55%. The few exceptions that allow you to access your pension fund before that age and take out the full tax-free sum include being in poor health or your life expectancy being less than a year. 

Retirement Statistics in the UK

8. In 2019, the average age of retirement in Britain was 65 for men and 64 for women.

(GOV.UK) (The Guardian)

According to the DWP’s annual report, in two decades, the male average retirement age in the UK has increased by 2.1 years, while the female by 3.5. Hence, in 2019, the average age of exit from the labour market for women was 64.3 years old, a year earlier than that of men, who usually retired at 65.3 years old.

Currently, to account for growing life expectancy, the State Pension age is 66 for both men and women. 

9. The official retirement age is set to increase to 67 between 2026 and 2028.

(The Guardian)

In the early 20th century, when old age pension was first introduced, less than a quarter of Brits reached the State Pension age. However, in 2017, 85% of them did. That’s why between 2026 and 2028, the government is planning to raise the SPa to 67.

10. Over 50% of people will keep working after reaching the SPa in the next ten years.

(The Guardian) (AgeUK)

Employers are no longer able to force people to stop working just because they’ve met the State Pension age. By 2030, out of a projected 546,000 new jobs in the UK, more than half are expected to go to employees aged 65 or over, or specifically 282,000.

According to the same predictions, this age group will likewise account for nearly two-thirds of the total employment growth by 2060, mostly due to more women and baby boomers joining it. 

UK Pension Savings Statistics

11. The average pension pot at 65 in the UK is currently £61,897.

(The Telegraph)

A simple retirement lifestyle would require around £12,000 a year, The Telegraph reports. You’d need to get an additional £3,000 a year from your pension pot, which, added to a full State Pension, would allow you to live a basic-level lifestyle. However, the average estimate of a good pension is about a third higher than that, standing at £17,818.

12. At 55, £100,000 in your pension pot would fetch you more than a moderate retirement income.

(The Telegraph)

If you’ve reached the age of 55 and wish to go into semi-retirement, you’d be well-served by going over your retirement plans. To have a nice old age with an annual pension of £25,000, you’d need to have decent-sized pension savings of around £100,000 and make a monthly contribution of at least £500. 

13. To enjoy a comfortable retirement, you’ll need an income of £33,000 per year.

(Unbiased)

Average is good but comfortable is better. In other words, a single person with an annual pension of £33,000 would be able to spend three weeks on holiday in Europe, have a generous yearly clothing allowance of £1,500, and be able to fork over £56 a week on food.

14. The “70% rule” is a handy tool for calculating your annual pension.

(Unbiased)

A popular method of calculating the ideal retirement income that would allow you to maintain your lifestyle is the “70% rule”. So, if your salary before retirement was £50,000, you’d want to generate an annual pension of £35,000. However, this isn’t a hard-and-fast rule—it’s best to identify your specific spending needs and plan accordingly.

15. 17% of Brits aged over 55 have no private pension savings.

(Unbiased)

Almost half of non-retired British adults have unrealistic expectations of their State Pension income, a recent survey suggests. In other words, 45% of the working population is hoping for a retirement income of at least £20,000 a year, which is more than double the average annual State Pension in the UK.

16. One in five people don’t know how much they have in their pension pot.

(Unbiased)

Some people find it challenging to keep track of their savings. Perhaps that’s why 20% of Brits have no idea how much they’ve tucked away in their pension pots. Surprisingly, the most uncertain was the group of people nearest to retirement, with nearly a quarter (24%) having no clue how much they have in their pension savings.

UK State Pension Statistics

17. Your State Pension depends on your National Insurance records.

(GOV.UK)

To get the full new State Pension amount in the UK, you’ll need to have 35 qualifying years of full NI contributions, not counting the ones you’ve paid at a lower NI rate. We must stress that to get any State Pension, you’ll need at least ten years on your National Insurance record.

18. If you reached State Pension age on or before 5 April 2016, you got the basic State Pension.

(GOV.UK)

Under the old State Pension, if you were employed, you paid National Insurance, which entitled you to the Basic State Pension and Additional State Pension. The total weekly income from this pension type was £134.25 if you had 30 qualifying years. 

19. A single person’s full new State Pension was £175.20 a week in 2019/20.

(GOV.UK)

If you reached the State Pension age on 6 April 2016 or later, you got the new State Pension under the new rules, which is based on your National Insurance record alone. According to the GOV.UK website, for the year of 2019/20, the full new State Pension was £175.20 per week.

20. Women’s annual pension incomes are £7,000 lower than men’s.

(Independent) (Prospect)

According to the latest pension statistics in the UK, the gender pension gap in 2018/19 was a whopping 40.3%, a 10-year high. For women, it’s harder to accumulate pension savings, mainly because they earn less than men. If they take time out to care for children or elderly family members, their pension pot usually takes a huge hit as well.

When it comes to personal pensions, the difference is even starker. Namely, men receive an average of £19 from them per week, nearly four times as much as women, who only get £5.

21. If you’re widowed, you can inherit some form of your partner’s State Pension.

(GOV.UK)

If your spouse or civil partner passes away, you can inherit some of their qualifying years to increase your Basic State Pension, in case you don’t already get the full amount. Under the new State Pension, you can come into extra payments to your own pension. However, if you remarry or form a new civil partnership before you reach the State Pension age, you get nothing!

Private Pension Statistics 

22. In 2017/18, 10.4 million individuals were contributing to a personal pension in the UK.

(GOV.UK)

Likely as a result of automatic enrolment, there’s been an increase in the number of people contributing to a personal pension scheme in the UK. The latest statistics tell us that over 10 million Brits were making contributions in 2017/18, up from the previous tax year’s 9.4 million.

23. Personal pension contributions grew by £7.3 billion in a decade.

(GOV.UK)

It seems that the Great Recession has made Brits more mindful about putting money aside for retirement. The total value of personal pension contributions was £28.2 billion in 2017/18, 3.1% higher than the prior year.

24. A single person’s average contribution to a personal pension in the UK is £2,700 per year.

(GOV.UK)

According to the latest government statistics, during the tax year 2017/18, there was a drop of around £200 in the average annual contribution per individual from the previous year’s £2,900.

25. The number of employer personal pension contributions approximated 18.7 billion.

(GOV.UK)

While the number of individual contributions has decreased in the last few years, the number of employer contributions has been increasing. Of the total amount of personal pension contributions of £28.2 billion, £18.7 billion came from employers’ payments. 

26. AJ Bell, Hargreaves Lansdown and Fidelity are some of the UK’s best-known private pension companies.

(Unbiased)

When you start browsing the internet for the best private pension providers, these company names will pop up on almost every site you open: AJ Bell, Hargreaves Lansdown, Aegon, Interactive Investor, PensionBee, Fidelity, etc. However, reputation, service levels and variety of funds on offer are just some of the factors you should consider before choosing one of the many UK pension providers.

Workplace Pension Statistics

27. Over three-quarters of UK jobholders were members of a workplace pension scheme in 2019.

(ONS)

Since automatic enrollment in workplace pension schemes was instituted back in 2012, there’s been a constant increase in participation. Namely, in 2019, 77% of British employees were part of a workplace pension scheme.

28. Nearly 90% of public sector workers are part of a workplace pension scheme.

(ONS)

Far more public than private-sector employees were members of a workplace pension scheme in 2019 (89% vs 73%), even though the gap is slowly narrowing. The starker differences are in the types of workplace pension.

Namely, 92% of public sector employees were signed up for the occupational defined benefit type, as opposed to just 11% of private-sector workers, among whom the occupational defined contribution type was the most common.

29. There are 45.6 million occupational pension scheme members in Britain. 

(ONS)

According to the Occupational Pension Schemes Survey, there were close to 46 million estimated memberships in 2018. About 17.3 million of these were active members of occupational pension schemes.

30. Private sector employees who are members of occupational pension schemes outnumber public sector ones almost 2:1.

(ONS)

According to pension statistics from the UK, in 2018, there were 6.3 million active members of occupational pension schemes in the public sector and nearly twice as many in the private one. Specifically, active membership in occupational pensions among the latter ballooned from 2.7 million to 11 million between 2012 and 2018, while active membership in the public sector only increased by 1.2 million over the same period. 

Auto-Enrolment Statistics 

31. To be eligible for automatic enrolment, you need to be making over £10,000 a year.

(LITRG)

To qualify for auto-enrolment in 2020/21, you must be between the age of 22 and State Pension age, under a contract of employment in the UK, and have annual earnings exceeding £10,000.

32. Currently, the minimum total contribution for auto-enrolment is 8% of your qualifying earnings.

(LITRG)

By default, the employer is required to make contributions, but in most cases, the employee is also obliged to contribute to the pension scheme. The employer’s minimum contribution is 3%, and since the total minimum auto-enrolment contribution rates are 8%, you’ll need to add 5%.

Private Pension Wealth in the UK

33. The total private pension wealth in Great Britain from April 2016 to March 2018 was £6.1 trillion.

(ONS)

As reported by the Office for National Statistics, aggregated private pensions wealth accounted for 42% of the UK’s total wealth from April 2016 to March 2018. The gross private pension wealth amounted to just over £6 trillion.

34. Almost half of the overall private pension wealth was held in pensions in payment.

(ONS)

From April 2016 to March 2018, the total private pension wealth in Great Britain was held in three components: over £2.9 trillion or 48% of the total private pension wealth was held in pensions in payment, upwards of £2.2 trillion or 37% in active pensions, and £915 billion or 15% in preserved pensions.

35. £1.8 trillion of active pension wealth was held in occupational defined benefit pensions.

(ONS)

Of the main two types of private pension in the UK, £1.8 trillion of active pension wealth was held in occupational defined benefit pensions. Only 11% or £202 billion was contributed to occupational defined contribution pensions. The smallest share was that of personal pensions at £205 billion.

Tax Relief Statistics

36. The total tax relief on private pension contributions in the UK was estimated at over £37 billion in 2017/18.

(GOV.UK)

According to government datasets, the income tax relief on private pension contributions increased to £37.2 billion in 2017/18, a rise of half a billion over the prior year. Unsurprisingly, the lowest total was in the self-employed pension contributions category, of just £500 million.

37. For every pound you pay in, £1.25 gets added to your pension pot.

(GOV.UK) (Unbiased)

The government provides private pension tax relief to encourage saving for retirement. It applies to all personal and stakeholder pension schemes, as well as some workplace ones. If you’re a basic rate taxpayer, you automatically get 20% relief at source. In other words, for every pound you contribute, £1.25 lands in your pension savings.

38. Higher-rate taxpayers get an additional 40% tax relief on top of the standard 20%.

(Unbiased)

For higher earners, there’s a different pension tax relief rate. If you belong to this group, you’ll get 40% tax relief added to that 20%. In essence, for every pound you pay in, your pension pot will expand by £1.66. One thing you should know, though, is that you’ll need to claim this bonus via your tax return.

Some Final Thoughts

The long and the short of it is, if you want a comfortable retirement, you’ll need to contribute all you can to your pension pot. And, as these pension statistics in the UK have illustrated, it’s best to start saving for your golden years as early as possible. Otherwise, you might miss out on a lot. You don’t want to be worrying about your pension at a stage of life when you should be getting a much-deserved break.