More than half (51 per cent) of disabled people are set to experience poverty in retirement, according to a new study from Scottish Widows.

In its 19th annual Retirement Report, the life insurer found that the average disabled person expected to manage on £11,000 per year in retirement, which equates to 61 per cent of the income predicted for non-disabled people.

This means that 51 per cent of disabled people will face hardship when they reach retirement age.

Scottish Widows made the calculations after creating a new national retirement forecast system with Frontier Economics and interviewing almost 6,500 people with the help of YouGov.

It then used its research and compared it with the Pension and Lifetime Savings Association (PLSA)’s retirement living standards to assess the kind of lifestyle that people will be able to afford.

The report also cited data from disability equality charity Scope, which outlineds how disabled households need £975 more per month than a non-disabled home, in order to secure the same standard of living. As a result, the already considerable retirement income gap highlighted by the Scottish Widows may even be a conservative estimate.

Scottish Widows' head of policy, Pete Glancy, said the report highlighted the importance of addressing the inequalities that disabled people face, due to the additional costs of living that make it harder for them to achieve a good retirement lifestyle.

"Employers must act now to resolve disparities in pay, progression and to close the pensions gap, while the government must advocate for more transparency from businesses to help disabled people to avoid the bleak reality of a retirement suffered in poverty,” he said.

Commenting on the findings, Scope's head of policy and campaigns, Louise Rubin, also called on politicians to make the disability employment and pensions gap a priority.

“Life costs a lot more when you’re disabled, and planning for retirement is a luxury many cannot afford," she continued. "Many disabled people are denied the opportunity to get into, stay in, and progress in work, making it much harder to build up a pension.

"We need to break the link between poverty and disability and make sure disabled people have an equal standard of living."

Scottish Widows also revealed that just over one in three (35 per cent) of Brits could be facing poverty in retirement.

The insurer s aid living expenses remain a real concern for a large majority (75 per cent) of Brits, which could be affecting retirement preparation. Against the backdrop of ongoing economic uncertainty, a worrying minority (21 per cent) is also cutting back on essentials — up from 16.5 per cent in 2022.

Worryingly, said the insurer, almost half (41 per cent) of people currently in their 20s are heading for hardship in retirement, with the group having a projected average retirement income of £10,000.

"Last year’s Retirement Report highlighted the impacts of the pandemic, cost of living and wage stagnation," added Glancy. "This year the pressure seems to have intensified due to increasing inflation and interest rates continuing to climb.

“The solution needs to be threefold. We are calling on the government to help end retirement poverty by implementing long-term reforms, such as ensuring that automatic enrolment can support those on lower incomes.

"Secondly, businesses need to do more to address the inequalities faced in the workplace by disadvantaged groups. Finally, the financial services industry must get better at effectively communicating to build trust and ensure that people of all incomes and demographics understand how to save effectively for retirement.”

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