Pension Shortfalls: How to Spot Them Before They Become a Problem

When was the last time you actually looked at your pension pot? It is easy to just let your pension sit in the background, and assume (or hope) that you will have enough to live comfortably in retirement. But what if you are not saving enough, and you don’t realise until it is too late?

The Pensions Commission’s 2026 interim report found that around 15 million UK adults are currently undersaving for retirement, which could rise to 19 million without action. This proves that pension shortfalls are not a niche problem only affecting a few careless people; they are impacting many of us who have always assumed we are saving enough.

But the good news is that if you spot a pension shortfall early enough, it is relatively easy to fix it. If you leave it too late, however, your options can quickly diminish. Here are the warning signs you cannot afford to ignore, and how to put them right.

What is a Pension Shortfall?

A pension shortfall is the gap between the income you are on track to receive and what you will actually need to fund your desired lifestyle. That figure is entirely personal to you, but there are some useful benchmarks to help you determine what your realistic retirement income might be.

The full State Pension currently pays £241.30 per week, which adds up to £12,548 per year. However, the Retirement Living Standards suggest that even a minimum standard of living costs roughly £14,400 per year for a single person, rising up to £45,400 for a comfortable retirement. 

The gap between what the State Pension provides and what you actually need to retire has to be filled by your workplace or your personal pensions. But millions of people in the UK are not contributing enough, and they could find themselves struggling financially in retirement.

Pension Warning Signs You Cannot Afford to Ignore

You Are Only Paying the Auto-Enrolment Minimum

The law only requires a minimum combined contribution of 8% of your qualifying earnings (5% from you and 3% from your employer) for your workplace pension. If you have never increased this rate, you may find yourself falling short of your retirement income goal.

You Have Lost Track of Your Old Workplace Pensions

Research by the Pensions Policy Institute found that there are over £31 billion worth of lost pension pots in the UK. It can be easy to lose track of your pension when you change jobs, but doing so could mean missing out on retirement funds you have already earned.

You Are Not Saving Enough Because You Are Self-Employed

Only around 20% of self-employed workers are currently paying into a pension. Without an employer prompting automatic contributions, you actively have to save for your own retirement. This can easily slip down your priorities list when you have other expenses to pay for. 

You Have Never Worked Out Your Target Retirement Income

It is almost impossible to determine whether you are on track with your pension savings when you don’t know what you are aiming for. Many people reach their fifties without ever calculating a rough figure, so they have no idea if their current provision is adequate or falling short.

You Assume That the State Pension Has You Covered

As the figures above show, the State Pension is not designed to stretch much further than a very basic standard of living. If you are depending on it to fund your retirement, then we recommend double checking that assumption sooner rather than later.

How to Fix Your Pension Shortfall Before It Becomes a Problem

1) Track Down Every Pension You Have Ever Paid Into

List every job you have ever had and note whether a pension came with it. If you do not have any paperwork, you can contact your old employer’s HR team or the government’s free Pension Tracing Service to find lost pots. Once found, ask each provider for your current value.

2) Work Out What Income You Actually Need

Use a benchmark like the Retirement Living Standards to see what a minimum, moderate, or comfortable retirement costs per year. Be honest about which one matches the life you want to lead.

3) Compare Your Current Position Against That Target

Once you have your total pension value and target income to hand, you (or an adviser) can project what income you are on track to receive. This is the moment your shortfall becomes a specific number that you can solve.

4) Gradually Increase Your Contributions

If you are able to increase your monthly pension contribution, even by a small amount, we highly recommend doing so. That extra money will have more time to grow and could add up considerably by the time you retire.

5) Work With a Professional Financial Adviser

Your pensions should not sit in isolation from the rest of your finances. A financial adviser will look at your pensions alongside your savings, tax position, and long-term goals, and help you build a coherent plan to achieve those objectives.

Get Your Pension Back on Track with Piercefield Oliver

Pension planning can be daunting, and it is something that many of us do not want to face. But the sooner you take control of your retirement income, the more likely you can achieve your desired lifestyle.   

Our expert financial advisers can help you build a clear and honest picture of where your pension currently stands, and what it will realistically give you in retirement. If we spot any shortfalls, we will help you to understand why, and put together a plan to close them before it is too late.

Book your free consultation with one of our pension advisers to find out exactly where you stand.