The Underpensioned Report 2025 – published today by pension provider Now:pensions, in partnership with the Pensions Policy Institute – identified eight groups who are most at risk of retirement poverty: carers, people from ethnic minority backgrounds, people with disabilities, women, divorced women, single mothers, self-employed people, and multiple jobholders.
These underpensioned groups have annual private pension incomes ranging from £3,650 to £6,750, compared with the population average of £8,500.
Of the underpensioned groups highlighted in the report, people with disabilities have the lowest pension income, at 43% of the UK average.
Though people from ethnic minority backgrounds and carers have seen increased employment rates since 2022, when Now:pensions' research was last conducted, despite the rise, these groups still have pensions savings that are below the population average (62% for ethnic minorities and 80% for carers).
Carers are at risk of financial vulnerability due to the challenges of staying in paid work alongside the demands of caring for a loved one, said Sara Thompson, chief people officer for insurance provider Phoenix Group.
She told HR magazine: “Most people want to work if they can. Three fifths of full-time working carers say they would return to work or increase their hours if they had the right support [according to research from the Centre for Social Justice, 2024], allowing them to continue earning and saving for retirement.
“To make this a reality, I urge all employers and business leaders, who can, to offer paid carer’s leave, along with a wide range of flexible working arrangements, including remote and part-time working. These policies can make a huge difference to people’s ability to balance work and care responsibilities, as well as manage health conditions of their own, which are disproportionately likely among over 50s – the largest demographic among carers.”
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Carers tend to work in professions where pension provision is minimal, said John Mullally, group risk and healthcare consultant at employee benefits provider Cartwright Employee Rewards. This fuels a pensions savings gap, compared to other employed groups.
He told HR magazine: “If you dive down into the areas that carers work in, there is a high chance that that they may be on temporary contracts, so the pension provision is likely to be the minimum, and their work may potentially require an element of night shifts, making attendance at financial education/pension awareness sessions in the daytime that bit harder to attend.
“There are real instances of carers working in homes where they are older than the people that they are looking after, simply because they cannot afford to retire yet.”
To close that savings gap, early education is crucial, Mullally continued. He advised policymakers to embed information about pensions into education at schools and college, so that carers understand what they need to be doing early on.
He added: “A sizable number of carers have been forced into [caring for the long-term] as a result of caring for their loved ones, parents, or siblings, so they may not necessarily have had the opportunity to explore pension provision before going into it. Eldercare support is being offered by some companies for employees to use to help support their elderly parents.”
To better support carers, managers should shift towards focusing on outcomes rather than presenteeism, added Aaron Dryden, care experience lead at caregiving support provider Yurtle.
Speaking to HR magazine, Dryden said: “Support for working carers that enables them to thrive can include offering flexible working that doesn’t inevitably result in reduced working hours – with the resulting financial impact. Carers succeed in workplaces that foster psychological safety, where people feel able to share how they would like to be supported.”
Research published by Phoenix Group last November found that half (47%) of carers had no private pension savings at age 60 to 65. At that time, carers also had 17% less than the median pension wealth by the time they reached the age of 60 to 65.
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Employers can help to close the pension savings gap by enhancing paid leave policies, suggested Kate Smith, head of pensions at financial services provider Aegon.
She told HR magazine: “They could go further by continuing to pay employer and possibly employee pension contributions during times of unpaid leave, based on pre-leave pay. Doing so reduces pension gaps, and enables carers to build up a larger pension pot at a time of vulnerability.”
