One in five UK workers face risks of inadequate retirement incomes despite relatively high earnings, with employer pension contributions identified as a key factor influencing retirement outcomes, research by the Pensions Policy Institute (PPI) has revealed.

The annual UK Pensions Framework report, which modelled six representative worker profiles, showed that a higher-paid private sector worker may build relatively less pension wealth than a lower-paid public sector worker because employer contributions were closer to minimum automatic enrolment levels and some elements of remuneration were not fully reflected in pension saving.

The PPI said the findings challenged the assumption that retirement adequacy can be understood primarily through earnings.

In contrast, lower-paid workers with access to stronger employer pension provision, including defined benefit (DB) schemes, were found to be better positioned to maintain their living standards in retirement. This group accounted for 11 per cent of the UK working population.

The PPI concluded that policymakers, pension schemes and providers should take a broader view of retirement adequacy, recognising that higher earners can still face retirement income shortfalls where employer contributions are comparatively weak.

PPI senior policy researcher, Lauren Wilkinson, said: “There is not one single adequacy challenge, and therefore no single policy response that will be equally effective across the workforce.

“People face different barriers to building adequate retirement incomes, shaped not just by their earnings, but also their capacity to save and the employer provision available to them.”

The PPI report comes as the Second Pensions Commission prepares to deliver its final report in spring 2027, prompting Wilkinson to stress the need for “a more nuanced, cross-cutting approach that considers pensions alongside housing and wider household wealth, as well as the respective roles of individuals, employers, and the state”.

This is the fifth report in the UK Pensions Framework series and was sponsored by Aviva.

Commenting on the findings, Aviva managing director of wealth, Michele Golunska, said: “When we think about retirement adequacy, it's easy to assume that higher earners will inevitably achieve better retirement outcomes.

“This research challenges that assumption, showing that the pension support they receive from their employer and their ability to save consistently can be just as important as earnings.

“As the Pensions Commission considers the future of the UK pensions system, these findings highlight the need to look beyond income when considering adequacy.”

Elsewhere in the report, the PPI said the balance between individual, employer and state responsibility for retirement provision may need to shift as workers' ability to build private pension wealth changes.

It also highlighted significant differences in retirement outcomes based on where people work, warning that while current policy helps to address some inequalities, gaps remain for those with limited capacity to increase pension saving.

The report added that differing causes of low pension saving present different policy challenges, meaning no single solution is likely to be effective across the workforce.

---