The major new report comes from Scottish Widows
Millions of workers whose lives are overshadowed by physical or mental health conditions are facing a retirement income crisis, with half at risk of pension poverty, according to a significant new report.
An estimated 50% of adults whose health conditions affect their day-to-day lives are on course for pension poverty in retirement – almost double the 27% rate for the wider population. The research findings from Scottish Widows come amid mounting concern that soaring levels of long-term illness are forcing people out of the workforce, cutting their earnings and leaving them with considerably smaller pension pots.
Under the latest retirement projections, pension poverty refers to having an income below the minimum threshold required to achieve the retirement lifestyle standards outlined by the Pensions UK Retirement Living Standards. The report sheds light on how health problems can derail careers well before retirement age.
While 60% of UK adults believe they will be fit enough to carry on working until their intended retirement age, almost three in 10 (29%) say their physical or mental health has affected their capacity to work over the past five years.
For many, the consequences have been severe. One in 10 (10%) said they had ceased working entirely due to health issues, while 7% had cut their hours and 6% had moved into less demanding or lower-paid roles.
The report cautions that these disruptions can have a lasting impact on retirement prospects by reducing pension contributions and making it considerably more difficult to build up savings. Research published this week by the Pensions and Lifetime Savings Association revealed that a single pensioner now requires approximately £13,400 a year to achieve a minimum standard of living in retirement, climbing to £31,700 for a moderate lifestyle and £43,900 for a comfortable one.
Against that backdrop, a growing number of people with health conditions face an increasing risk of falling short of these figures. The study also uncovered widespread concern over the potential cost of care in later life.
More than a third (34%) of adults have yet to consider how they would fund their care should they need it, while 51% are not confident they could afford it. Among those living with a physical or mental health condition, anxiety runs even higher, with 67% lacking confidence in their ability to meet future care costs.
Susan Hope, a pension expert at Scottish Widows, said: “Navigating health challenges is something which many of us will have to face in our later years.
“Whether it’s managing a chronic condition, mental burnout, or working through menopause, physical and emotional struggles often force people to change their working patterns, cut back their hours or drop out of the workforce altogether. This just doesn’t affect our day-to-day lives, it often knocks our long-term financial plans off track too.”
She added that workers could strengthen their retirement prospects by taking straightforward steps such as checking pension balances, reviewing retirement goals and considering whether employers would match additional pension contributions.
Scottish Widows highlighted that starting pension contributions earlier, increasing uptake of income protection and critical illness cover, and providing more personalised financial guidance could all help to lessen the financial impact of poor health.
The findings were based on research conducted by YouGov, which surveyed 6,224 UK adults in February, forming part of Scottish Widows’ most recent Retirement Report.
