Ahead of the autumn budget, a Freedom of Information request for DWP records by Sir Steve has unearthed previously unpublished government estimates of the scale of under-saving for retirement in the UK.
The DWP has also run similar projections but on the basis that the state pension either a) is linked in future to the growth in average earnings or b) is linked simply to inflation, as was the policy prior to the introduction of the triple lock.
Under both of these alternative assumptions, millions more people of working age can be expected to face a huge drop in income in retirement, he explains.
“These shocking figures reveal that the true state of under-saving for retirement in Britain is far greater than has previously been admitted.,” says Sir Steve, now a partner at pension consultants LCP.
“Very few people expect the triple lock to continue for another 50 years, yet this is the basis on which the Government has so far published estimates.
“If the triple lock were to be replaced by an earnings link, millions more people would face a sharp drop in their standard of living when they retire. And a prices link, as was the policy until 2010, would see around 1 in 3 of today’s workers set to retire short of even a bare ‘minimum’ standard of living.
“Against this backdrop, the Chancellor should be taking measures in the Budget to boost pension saving, not undermine it.”
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The FOI provides three benchmarks for how much people might need in retirement:
- A ‘target replacement rate’ – basically that the median earner should be able to replace about 67% of their pre-retirement income when they retire; the lowest earners need to replace 80% of their income post-retirement on this benchmark, and the highest earners need to replace 50%.
- The ‘minimum’ benchmark set by Pensions UK (previously PLSA) for a very basic retirement.
- The ‘moderate’ benchmark set by Pensions UK for a ‘middling’ retirement.
The table below shows DWP’s estimates for how many people are under-saving relative to these benchmarks.
The first row is the figure published in July 2025, based on the triple lock continuing indefinitely.
Rows 2 and 3, based on the FOI, show what the figures would be if the pension were instead linked to average earnings or CPI.
What would this mean for pensioners approaching returement?
Rather than 14.6m (43%) of people of working age facing a sharp drop in their standard of living on retirement, dropping the triple lock would lead to 19.0m (56%) facing such a drop if the pension was linked to earnings and 26.1m (77%) if it was linked to inflation.
The numbers failing to meet even the Pensions UK minimum threshold would rise sharply if the ‘triple lock’ were to go; an earnings link in future would see an extra 1.4m failing to reach this minimum threshold, whilst a price link would see more than 7m extra pensioners likely to retire below this basic standard.
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The numbers set to miss out on a ‘moderate’ standard of living are already very high with 25.4m or 73% set to fall short; weakening the uprating of the state pension would add up to 3.4m more to the number falling short.
These numbers not only inform the debate about the future of the triple lock but also the forthcoming Budget, where it is widely rumoured that the Chancellor will raise up to £2 billion by cutting back on workplace ‘salary sacrifice’ schemes for pensions.
Such a measure would further undermine pension saving when these figures show that the true state of under-saving is already far greater than previously revealed.