UK retirement savings gap a key advice challenge

The UK faces a retirement savings gap that is increasingly tied to a lack of accessible financial advice, according to a new analysis from Moneybox director of personal finance Brian Byrnes. The Pensions Commission’s recent interim report highlights that just 9% of UK adults have received regulated financial advice in the last year, leaving millions to manage complex retirement decisions without professional help.

Byrnes argues that these problems are not separate. The retirement preparedness gap, the housing affordability crisis, and the advice gap are deeply connected, but they are too often discussed in isolation. The Commission’s report, he notes, begins to join those dots by recognizing that retirement outcomes depend on more than just pension contribution rates.

People who reach retirement without owning a home face significantly greater financial pressure. Those without access to advice or guidance are less likely to understand how much they need to save, how their pension should be invested, or how to turn their savings into sustainable income when they stop working.

Advice gap meets retirement gap

The Commission’s analysis finds that many people are approaching retirement with savings that fall well short of what would be needed to sustain their desired standard of living.

While much of the debate focuses on contribution rates and policy reform, he points to a more fundamental challenge: the system increasingly relies on individuals making complex financial decisions, yet little has been done to ensure they feel equipped to make them.

If every person in the UK had access to a financial adviser throughout their working life, he suggests the shortfall would look considerably smaller. But the advice model has never had a practical solution to serve tens of millions of people at scale.

That’s where technology enters the picture.

Byrnes sees AI-enabled financial guidance as one of the most significant opportunities facing the industry. For the first time, he argues, it’s possible to picture a future where personalized financial guidance is accessible to almost everyone. The task now is ensuring regulation evolves alongside the technology so consumers can benefit from safe, accessible and scalable support. At Moneybox, Byrnes says this has the potential to be genuinely transformative, extending the reach of advice services to millions of people who currently have no access.

Investment engagement remains stubbornly low

The urgency of that opportunity becomes clear when looking at some of the Commission’s findings. Despite investment returns accounting for up to two-thirds of a pension pot’s eventual value, 79% of defined contribution savers have never reviewed where their pension is invested.

People are being asked to make decisions that can shape decades of financial outcomes, often with little support and limited confidence that they are making the right choice.

The picture at retirement is no less concerning. Pension freedoms have delivered greater flexibility and choice, but they have also transferred responsibility for managing longevity and investment risk onto individuals.

Nearly half of defined contribution pension pots are now fully withdrawn as cash, while 70% of pots worth less than £30,000 are accessed without any regulated advice or guidance.

Viewed through that lens, the preparedness gap becomes far less surprising. He frames it as an engagement problem, an education problem, and increasingly a guidance problem.

This challenge is even more acute among the self-employed, one of the groups the Commission identifies as facing the greatest retirement risks. Sitting outside the automatic enrolment framework, only 4% of those earning solely through self-employment currently contribute to a pension.

For many self-employed workers, the barriers extend beyond affordability. Their focus is on running a business, managing cash flow and juggling competing priorities. Retirement planning rarely makes it to the top of the list.

Small interventions, outsized impact

Byrnes suggests that relatively simple interventions could have an outsized impact.

Imagine a business owner receiving timely, personalized guidance explaining how surplus company cash could be contributed to a pension, reducing a corporation tax bill while strengthening long-term retirement outcomes. These are not especially complex strategies, nor are they niche opportunities.

The challenge is that the current regulatory framework makes it difficult to deliver this kind of personalized support at scale, leaving many people without guidance that could materially improve their financial future.

The tools increasingly exist to provide personalized financial guidance at scale. The challenge now is creating the framework that allows them to reach the people who need them most.

The Pensions Commission’s report is ultimately a reminder that retirement adequacy is not solely a savings problem.

It is also an engagement problem, an education problem and, increasingly, a guidance problem.

If every person in the UK had access to personalized financial support throughout their lives, Byrnes concludes, many of the problems identified by the Commission would look considerably less daunting — and for the first time, advances in technology mean that ambition no longer feels unrealistic.