45% of Working-Age Adults Aren’t Paying into a Pension. What Employers Need to Know

A recent government report (1) has revealed a concerning statistic: 45% of working-age adults in the UK are not paying into a private or workplace pension.

This is despite automatic enrolment legislation, which requires employers to enrol eligible employees into a workplace pension scheme.

Current Criteria for Auto-Enrolment
Employees must be:

• Earning at least £10,000 per year
• Aged 22 or over and below the State Pension Age

Those who meet these criteria must be automatically enrolled. However, employees can still opt out, and that’s where problems begin.

1. “The State Pension Will Be Enough”

Many employees still believe the state will support them sufficiently in retirement. The reality:

• The full state pension (2025/26) is just £11,973 per year (2)
• It requires 35 years of National Insurance contributions

This amount alone is unlikely to cover even basic living expenses for most retirees.

2. “I Can’t Afford It Right Now”

With the cost of living still high, many individuals prioritise immediate needs over future security.

This is particularly common among younger and lower-income workers.

3. “Retirement Feels Too Far Away”

Younger employees often don’t see pension contributions as a priority. However, the earlier they start saving, the greater the long-term impact due to compound investment growth. Think of it like an ever-growing snowball rolling downhill.

Those who delay often find themselves scrambling to “catch up” later in life.

4. “Lack of Understanding”

While auto-enrolment has helped increase participation, many employees still lack awareness of the benefits of staying in their pension scheme. Employers are not legally required to provide financial education, but this knowledge gap is hurting employees’ long-term outcomes.

The Numbers Behind the Pension Crisis

According to recent research (3):

• 39% are not on track to having enough income to meet their basic needs at retirement
• 15% don’t believe they’ll ever be able to retire
• 60% of low- to middle-income earners in their 30s could see their income drop by over 60% in retirement

What Can Employers Do?

While you’re fulfilling your legal obligations, going a step further can significantly improve your employees’ financial wellbeing and strengthen retention, morale, and productivity.

1. Communicate the Value of Pensions

Highlight employer contributions and tax relief in onboarding and annual reviews

Share real-world examples of long-term pension growth and what it means for your employee’s futures

2. Offer Financial Education

Partner with pension providers or financial wellbeing platforms

Host optional lunchtime sessions or webinars on the benefits of retirement planning

3. Target Younger Workers

Create content specifically addressing common myths (e.g. “I’ll sort it later”)

Emphasise the importance of starting early

4. Review Opt-Out Rates

Monitor your company’s opt-out data to identify trends

Engage with teams where opt-out rates are high to understand why

Government Action

Recognising the scale of the issue, the government has revived the Pensions Commission to address the growing retirement crisis. Today’s working population is at serious risk of being worse off in retirement than any generation before.

Final Thoughts

The state pension alone is not enough. Employers play a vital role not just in providing access to pension schemes, but in supporting awareness and understanding of their importance.

Better communication, more education, and regular check-ins can make a big difference.

At Omny Benefits we specialise in benefits packages that save employers money while enhancing employee savings outcomes and improving their financial wellbeing.