Retirement confidence hits new low ahead of Budget

Only one in four UK adults are confident they’ll have enough money to live comfortably in retirement, according to a new report from Nucleus.

The research reveals a growing sense of pessimism about retirement prospects, driven by the cost of living, low financial literacy, and frequent speculation about pension and savings rule changes.

Amidst speculation over the upcoming Budget, retirement confidence in the UK has fallen to its lowest point since the survey began. Only 26% of adults confident they will have enough money to live comfortably for the rest of their lives, down from 34% last year.

The 45-54 and 35-44 age groups have the lowest confidence. The next generation of retirees are less likely to have defined benefit savings to fall back on and haven’t benefited from auto-enrolment until later in their working lives.

Positively, confidence is highest among those receiving professional financial advice. UK adults who receive professional financial advice report a retirement confidence score of 5.5 out of 10 – well above the 4.2 national average – showing a strong link between planning, advice and long-term confidence.

Women’s confidence falls further behind men’s

The gender confidence gap has widened again this year. Men recorded an average confidence score of 4.6, compared with 3.8 for women. Nearly half of women (45%) said they do not currently contribute to a pension, compared to 40% of men.

Whilst defined contribution (DC) and workplace pension membership is broadly level between men and women (37% and 36% respectively), women are far less likely to have other forms of savings. Only 22% have a private pension compared to 30% of men, 25% have cash savings versus 35% of men, and 28% hold an ISA compared to 36% of men.

Andrew Tully, technical services director at Nucleus, said: “The gender gap in retirement confidence is a clear warning sign. Women are saving less, have fewer financial products, and are less confident about their long-term prospects. We need more targeted communication, flexibility in saving options, and a concerted effort to make financial planning more inclusive so women aren’t left behind.”

Cost of living pressures continue to bite

The report found that 43% of UK adults do not contribute to a pension, with 41% citing the rising cost of living as the main barrier to saving more or anything into their workplace or private pension. Rent and mortgage payments (24%) and debt repayments (16%) were also major obstacles.

Those who are paying into a pension are often not saving enough. The most common contribution level is between 5% and 10% of income – largely reflecting auto-enrolment minimums – far below what is needed for a comfortable retirement.

A striking 68% of respondents said they’d feel more confident about retirement if they’d learnt more about financial planning, pensions, and investing at an earlier age. Four in ten (42%) believe people should start planning in their 20s, a view shared across all age groups.

Confidence is also closely linked to engagement with advice. Those who have taken professional financial advice score significantly higher than those who rely on free guidance (4.4) or manage their own finances (4.9).

Policy changes fuelling uncertainty

Confidence has also been shaken by changes and speculation around pensions and tax especially in the lead up to the Budget. Nearly half (44%) of adults said they were worried about pensions being brought into scope for Inheritance Tax from April 2027, and three in five (59%) were concerned about possible cuts to tax-free pension lump sums, however, this has since been ruled out by Treasury officials.

The research also found widespread concern about the future of the state pension. More than half (54%) of UK adults believe it won’t exist in its current form within ten years, while a quarter (25%) think it may disappear altogether.

Understanding of how the system actually works also remains low. Almost half of respondents (44%) believe their National Insurance contributions go into a personal pot to fund their own pension.

Andrew Tully continued: “The state pension remains the cornerstone of retirement income for millions, yet confidence in its future is collapsing. People deserve clarity and consistency. They need to know what they’ll receive and when. Without that certainty, it’s almost impossible to plan effectively for the rest of their lives.

“We’re seeing a deep erosion of trust in the retirement system. Constant tinkering with pension rules makes long-term planning feel pointless. The IPC is a step in the right direction, but confidence won’t return until people believe the rules will remain stable. We need clear communication and a joined-up approach across pensions, housing and savings to give people the certainty they need to plan properly for the future.”