Growing numbers of workers believe they will never be able to afford to retire, according to research by Wealth at Work.

Due to the increased cost of living, 45 per cent of working people said they believed they would never have the means necessary to retire. In 2024, 39 per cent said that retirement would remain financially out of reach, while in 2023, 33 per cent said the same.

While future financial concerns weigh heavily on the minds of workers, Wealth at Work said that saving just 1 per cent more could make a significant difference, potentially adding as much as 25 per cent to retirement savings for a person in their 20s.

Under auto-enrolment (AE) rules, employers must enrol eligible staff into a workplace pension and make contributions of at least 3 per cent of qualifying earnings, while employees contribute 5 per cent to reach a minimum 8 per cent contribution – but increasing these contributions by a relatively small amount can lead to greater financial security in retirement, particularly if matched by the employer.

As an example, Wealth at Work said that if a basic rate taxpayer aged 25 and earning £20,000 were to increase their contribution by 1 per cent, and if this were matched by their employer, it could result in an increase of almost £25,000 to their final pension pot at the age of 68, an increase of around 25 per cent.

The cost to the employee would be less than £12 a month.

Wealth at Work director, Jonathan Watts-Lay, said: “It’s very concerning that many people are worried that they will never be able to afford to retire. With high living costs, it is completely understandable why some may think that saving for retirement isn’t a priority.

“When speaking to young people, many don’t realise the huge difference a small increase in their pension contributions can make if they start in their 20s, compared with starting in their 30s or 40s; especially if their employer offers to match it."

Watts-Lay cautioned against cutting pension contributions because of current financial pressures.

“Small increases can have a significant impact on an employee’s pension savings, but small reductions in pension savings can also make a huge dent,” he said.

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