People disabled before entering the workforce could retire with pension savings more than £245,000 lower than their non-disabled peers, new research from PensionBee has found.

The figures were published in the PensionBee report, Sick, tired and never retired?, examining the long-term financial consequences of disability and chronic illness in the UK.

It highlighted the long-term impact of reduced earnings, lower pension participation and higher later-life costs.

The study found that a person disabled in childhood and then working part-time faced a final pension pot of £109,886 – compared to £355,213 for a non-disabled full-time worker, resulting in a gap of £245,327.

Using ONS disability pay gap data, PensionBee modelled three scenarios based on the age at which disability begins – childhood, 30 and 50 – revealing that the earlier disability occurred, the greater the long-term financial penalty.

According to the report, nine out of 10 disabled people worry about their future financial security, with more than half worrying a lot.

In addition, nearly half of disabled people (48 per cent) have no pension provision beyond the state pension, while among those who have saved, more than half (52 per cent) hold less than £10,000.

Most (84 per cent) said their disability has negatively affected their ability to save.

The research follows the publication of the Pensions Commission’s interim report, which confirmed that over half of disabled people at age 46 have no pension wealth at all.

It also coincides with the Timms Review, the government’s examination of personal independence payment (PIP).

PensionBee has called on the review to consider removing the £10,000 automatic enrolment threshold, introducing a disability pension credit, and requiring that any reform to disability benefits be assessed for its long-term impact on retirement income.

PensionBee head of pensions, Becky O’Connor, said: “The impact of disability on long-term finances is profound. Disabled people face a ‘quadruple whammy’ affecting their retirement prospects and needs: constrained earnings and reduced labour market participation; the need to work longer despite health limitations; likely higher care costs later in life; and a greater likelihood of renting rather than owning in retirement.

“Nine in 10 disabled people worry about their financial future. Sadly, that anxiety is rational, and demands a policy response that goes beyond short-term benefit reform.

She added: “The Timms Review is an opportunity to recognise the ramifications of pension policy as well as welfare provision for disabled people, and to offer structural support that can ultimately reduce poverty and hardship for the long term for this financially vulnerable group.”

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