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⚠️ The Pension Gap

Understanding the Pension Gap Are You Saving Enough?

The pension gap is the difference between what you're saving and what you need for the retirement you want. For most people, this gap is larger than they realise. Understanding it is the first step to closing it.

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Understanding and Closing Your Pension Gap

A pension gap is the difference between the retirement income you want and the retirement income your current pension savings will actually provide. In the UK, this gap is alarmingly common – research from the Pensions Policy Institute suggests that millions of people are facing a significant shortfall in their retirement provision, with the average worker heading for an income well below the moderate PLSA retirement standard.

The pension gap exists for many reasons: years of contributing at the auto-enrolment minimum, career breaks for childcare or caring, periods of self-employment without a pension, poor investment returns, high pension fees eating into growth, and simply not starting to save early enough. Whatever the cause, identifying and measuring your pension gap is the essential first step towards closing it.

An FCA-regulated adviser can help you understand and close your pension gap through:

Gap analysis – calculating the exact shortfall between your target retirement income and what your current pensions will provide.
State Pension check – verifying your NI record and identifying gaps that could reduce your State Pension entitlement.
Contribution planning – calculating how much extra you need to save each month, factoring in employer matching and tax relief.
Fee reduction – moving from high-cost pension providers to low-cost alternatives can add tens of thousands over time.
Investment optimisation – ensuring your investments are working hard enough to close the gap within your remaining time horizon.
Alternative income sources – identifying ISAs, property, part-time work, or other income that can supplement your pension in retirement.

Key fact: The PLSA estimates a single person needs around £31,300 per year for a comfortable retirement. The full new State Pension provides £11,502 per year, leaving a gap of approximately £19,800 that must come from private pensions. At a 4% withdrawal rate, that requires a pension pot of around £495,000 – far above the average UK pension pot.

Gap Analysis

Common Pension Gap Sizes by Age and Savings Level

Understanding where you stand compared to retirement targets helps motivate action to close the gap.

Current Age	Average Pot Size	Target Pot (Comfortable)	Typical Gap
35	£25,000	£500,000 by 67	£475,000 (but time to close it)
40	£50,000	£500,000 by 67	£450,000 (strong growth potential)
45	£75,000	£500,000 by 67	£425,000 (action needed now)
50	£100,000	£500,000 by 67	£400,000 (urgent action needed)
55	£130,000	£500,000 by 67	£370,000 (maximise everything)
60	£160,000	£500,000 by 67	£340,000 (adjust expectations)

Important: These figures show average pot sizes, not targets. Many people have significantly less. If you are behind, the worst thing you can do is ignore the gap. Even modest increases in contributions, combined with fee reductions and better investment choices, can meaningfully improve your retirement outcome.

Who Is It For?

Who Benefits from Pension Gap Advice?

Anyone who suspects they may not have enough for a comfortable retirement should have their pension gap professionally assessed.

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Behind on Savings

If your pension pot is smaller than the guidelines for your age suggest, an adviser can calculate your exact gap and create a realistic plan to close it within your remaining working years.

Calculate your exact pension gap

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Career Break Gaps

Years out of the workforce mean years of missed contributions and potentially missing NI years. An adviser can quantify the impact and recommend catch-up strategies.

Address career break pension shortfalls

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Self-Employed Workers

Without employer contributions, the self-employed often face the largest pension gaps. An adviser can design a contribution and investment strategy that compensates for the missing employer match.

Close the employer contribution gap

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High Fee Pensions

Old workplace pensions with fees of 1-2% per year can dramatically erode your pot over time. Moving to a low-cost provider could close a significant portion of your pension gap automatically.

Review and reduce pension fees

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Poor Investment Performance

If your pension investments have underperformed, you may have a larger gap than expected. An adviser can review your fund choices and recommend alternatives with better growth potential.

Optimise your investment performance

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Approaching Retirement With a Gap

If you are within 10 years of retirement and have a gap, realistic planning becomes critical. An adviser can model adjustments like working longer, reducing income expectations, or phased retirement.

Create a realistic retirement income plan

Worried about your pension gap?

Get matched with an FCA-regulated pension adviser who can calculate your exact shortfall and create a plan to close it.

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Costs Explained

How Much Does Pension Gap Advice Cost?

Pension gap advice is often the most valuable financial guidance you can receive, identifying specific actions to improve your retirement.

£500–£2,000

Initial Gap Analysis

Comprehensive assessment of all your pensions, State Pension, other savings, and income targets. Produces a detailed gap report with specific recommendations for closing the shortfall.

0.5%–1%/year

Ongoing Gap Monitoring

Annual reviews to track progress against your target, adjust contributions and investments, and ensure you are staying on track to close your pension gap.

Worth knowing: Through PensionHelper, our matching service is free. Identifying your pension gap early gives you the maximum time to close it. Even if the gap feels large, an adviser can show you practical steps to improve your position significantly.

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Real Reviews

What Our Customers Say

Karen J.

Berkshire • Pension Gap Advice

★★★★★

“Gap was smaller than I feared”

I was convinced I could never retire comfortably. The adviser added up all my pensions, checked my State Pension, and showed my gap was £180,000 – large, but closeable with 12 years of increased contributions.

Steve M.

Sheffield • Pension Gap Advice

★★★★★

“Fee savings closed 20% of my gap”

My old pensions were charging 1.5% per year. Moving to a platform charging 0.3% will save around £35,000 over 15 years. That closed nearly 20% of my pension gap without contributing an extra penny.

Diane T.

Brighton • Pension Gap Advice

★★★★★

“NI gaps worth fixing immediately”

I was missing 5 years of NI from part-time work. Filling them cost £4,121 but adds £30 per week to my State Pension for life. That is £1,560 per year in extra guaranteed income. No-brainer.

Ian P.

Glasgow • Pension Gap Advice

★★★★★

“Realistic plan rather than wishful thinking”

Instead of pretending I could magically close a £250,000 gap, the adviser helped me adjust my retirement date by 2 years and target the moderate PLSA standard rather than comfortable. Much more achievable.

Joanne R.

Liverpool • Pension Gap Advice

★★★★★

“Career break damage being repaired”

Fifteen years of childcare left me with almost no pension. The adviser set up salary sacrifice contributions at 20% and my employer matches 8%. My gap is closing fast and I feel so much more confident.

Roger H.

Norwich • Pension Gap Advice

★★★★★

“Investment change made a real difference”

My pension was in a low-growth fund returning 2% per year. The adviser moved it to a diversified growth fund. Over 3 years, my returns have averaged 7%. That extra growth is closing my gap much faster.

Learn More

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Got Questions?

Pension Gap: Frequently Asked Questions

A pension gap is the shortfall between the retirement income you want and the income your current pension savings will provide. It is calculated by comparing your target annual income in retirement with the projected income from all your pensions, State Pension, and other savings.

Add up all your pension pots, check your State Pension forecast at gov.uk, multiply your total DC pot by 4% for estimated annual income, add defined benefit pension income, add State Pension. Compare the total to your target income. The difference is your pension gap.

Research suggests millions of workers face significant gaps. The average DC pension pot at retirement is around £107,000, which provides roughly £4,300 per year via drawdown. Combined with State Pension, this gives around £16,000 – well below the moderate PLSA standard of £23,300.

The fastest ways are: maximise employer matching, increase contributions through salary sacrifice, use carry forward for large contributions, reduce pension fees, improve investment returns, fill NI gaps for State Pension, and consider working a few extra years before retirement.

It depends on the size of the gap. Contributing £1,000 per month with employer matching and 5% growth could build around £160,000 in 10 years. Combined with existing savings, this can make a significant difference. An adviser can calculate whether your target is achievable.

Awareness is important, but panic is not helpful. The sooner you identify and measure your gap, the more time you have to address it. Even small improvements add up over time. A professional adviser can turn a worrying gap into a manageable action plan.

The full new State Pension of £221.20 per week (£11,502/year) provides a foundation but is insufficient for most people’s retirement goals on its own. It covers the PLSA minimum standard but falls well short of moderate or comfortable levels.

High fees compound over decades. A 1% annual fee difference on a £200,000 pot over 20 years could cost you £50,000 or more in lost growth. Switching from a 1.5% fee pension to a 0.3% fee alternative is one of the most effective gap-closing strategies.

If the gap cannot be fully closed, you can adjust your plan: target a moderate rather than comfortable retirement, consider working part-time in retirement, downsize your home, delay retirement by a few years, or explore other income sources like ISAs or rental income.

Missing NI years reduce your State Pension below the maximum £221.20/week. Each missing year could reduce your pension by approximately £6/week (£312/year). Voluntary NI contributions cost £824.20 per year per gap year. Filling gaps is often one of the best investments you can make.

Downsizing can release significant equity, and buy-to-let provides rental income. Equity release schemes allow you to access property wealth without moving. However, property should supplement, not replace, pension saving. An adviser can show how property fits into your overall retirement plan.

Self-employed workers typically face larger gaps because they miss employer contributions. A self-employed person saving 8% of income has effectively half the pension saving of an employee receiving an additional 8% employer contribution. Higher personal contributions and tax-efficient SIPP investing help close this gap.

Inflation increases the cost of your retirement target over time. If you need £30,000/year today, you might need £45,000/year in 15 years at 3% inflation. Your pension gap analysis should use inflation-adjusted figures to give a realistic picture of the shortfall.

Yes. ISAs provide tax-free income in retirement and can be accessed at any age (unlike pensions). They are particularly useful for bridging income before minimum pension age or supplementing pension income. The £20,000 annual ISA allowance allows significant additional saving alongside your pension.

As early as possible, but particularly at ages 40, 50, and 55. At 40, you have maximum time to close the gap. At 50, you can make realistic plans for the final stretch. At 55, you need an exact picture before making pension access decisions. Annual reviews help you stay on track.

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