Many people are now asking: is the UK having a pension crisis?
Recent media coverage, including The Guardian, reports that more individuals in their 50s and early 60s are deferring retirement. The reasons are clear. Rising living costs, inflation, and economic uncertainty are pushing people to work longer and save more before retirement.
This shift in retirement planning highlights growing concerns about the long-term stability of the UK pension system.
You can watch our detailed YouTube video on this topic below. If you are interested in more straightforward explanations on pensions and retirement planning, visit our YouTube channel.
The Current Situation
According to The Financial Times, many UK workers are now reducing their pension contributions due to increasing financial pressure.
With stagnant wages and the rising cost of living, some individuals are cutting back from contributing 3–10% of their salary to keep more in their monthly pay. The priority for many has shifted to immediate family needs rather than long-term retirement savings.
While this might seem like a necessary short-term decision, it can have serious long-term consequences. Pension pots rely on consistent contributions and time in the market to grow effectively.
As a financial advisory firm, we don’t offer one-size-fits-all advice. Whether reducing your pension contributions is right for you depends entirely on your personal circumstances, goals, and financial situation.
Pension Crisis and the UK State Pension
The state pension is backed by the UK government, who we believe will ensure that people receive their state pension. However, as all of you will have seen over the past decades, the state pension age has continued to rise. One of the reasons for this is a lack of funding.
Pension Crisis in Defined Contribution Pension Schemes
Defined Contribution (DC) pensions are generally less impacted by the UK pension crisis. These schemes work on a simple principle: you make contributions, those funds are invested, and your retirement income depends on how well those investments perform over time.
Your pension pot value reflects how much you’ve contributed, investment growth, and any charges applied by your provider. There’s no fixed income guarantee, which means DC schemes are not directly impacted like a DB pension is.
Because of this structure, DC pensions offer more flexibility. You don’t legally need a financial adviser to transfer one, as long as there are no safeguarded benefits or Defined Benefit elements involved.
However, we strongly advise against managing the transfer process alone. Pension transfers can be complex, time-consuming, and easy to get wrong. Many people who attempt it themselves quickly understand the value of expert support and why clients choose to work with firms like ours to ensure a smooth and compliant process.
Defined Benefit Pension Schemes: Where the Real Pressure Lies
Unlike Defined Contribution schemes, Defined Benefit (DB) pensions are under growing pressure in today’s economy.
From our experience in the industry, we don’t believe the long-term outlook is favourable for clients relying on DB schemes. With rising life expectancy, better healthcare, and more people living well into their 90s and beyond, the financial strain on these schemes is mounting.
When many of these DB schemes were established, life expectancy was far lower. The assumption was not that people would be retired for 30 or even 40 years. Today, some schemes are struggling to meet their long-term obligations, especially as fewer employers offer them, and most are now reserved for senior executives in large firms.
The risk? The sustainability of these payouts over time, especially with economic uncertainty and ageing demographics.
So What Should You Do About Your Pension?
If you’re asking yourself, “What should I be doing with my pension right now?” the answer depends entirely on your personal financial goals and needs.
The decision to transfer out of a Defined Benefit scheme has nothing to do with headlines, interest rates, recessions, or media coverage of a ‘UK pension crisis.’
It comes down to transfer suitability: a professional assessment of whether transferring is right for you. Even in a strong economy, many people are better off staying in their scheme. Likewise, during downturns, there are individuals for whom a transfer still makes sense.
In other words: ignore the noise. The most important factor is what your retirement will look like over the next 20–30 years, not what happens in the next 6–12 months.
📞 Book Your Free Pension Consultation
Don’t make a life-changing decision based on fear or guesswork.
Our qualified, regulated Independent Financial Advisers will help you understand your options clearly. Whether you’re exploring a Defined Benefit transfer or want clarity on your Defined Contribution pension, we’ll assess your situation and provide guidance based on what’s best for your future.
👉 Book your free consultation now and take the next step toward long-term financial clarity and confidence.