One-third of UK adults have less than £10,000 saved in their pension, according to the Financial Conduct Authority's latest Financial Lives survey.
The findings raise serious concerns about retirement readiness for millions of Britons who may become overly dependent on the state pension to cover their basic needs in later life.
Financial experts warn this situation is particularly troubling for those in their forties and beyond who have limited time to build adequate retirement savings.
The full state pension currently adds up to £11,973 a year, which while helpful for covering basic necessities, "doesn't leave money for life's luxuries," according to the FCA report.
One in there Britons have less than £10k in pension savings
GETTYMost financially secure retirees rely on a combination of state pension, workplace pensions, personal pensions, cash savings and ISA investments to fund their retirement years.
Without these additional sources of income, many Britons face the prospect of a retirement limited to covering only essential expenses rather than enjoying their later years.
While younger adults in their twenties and early thirties have decades ahead to build their pension pots, those in their forties, fifties or early sixties with less than £10,000 saved face a more urgent situation.
The FCA notes that "targeted support" reforms being prioritised by the Government could help people make better-informed decisions about saving and investing, potentially boosting financial resilience while supporting good customer outcomes.
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Pension crisis looms as millions risk poverty in retirementGETTYDan Coatsworth, an investment analyst at AJ Bell, advises Britons to consider increasing their workplace pension contributions beyond the minimum requirements.
"At least 8% of your salary must go into a workplace scheme under auto-enrolment rules; half from you, three per cent of your salary from your employer and the equivalent of one per cent from the Government," he explains.
Coatsworth highlights that many employers offer more generous contribution rates if employees increase their own payments, describing this as "effectively free money to give your pension a boost."
Self-employed individuals aren't forgotten in Coatsworth's advice, as he notes they "can still use a self-invested personal pension (SIPP) or a Lifetime ISA to save for retirement" while enjoying government top-ups through tax relief and bonuses.
For those managing personal pensions, Coatsworth recommends increasing monthly contributions, even modestly.
The retirement analyst added: ""Even an extra £30 to £50 a month could put a smile on your face in retirement.
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PA"You might be sacrificing a night in the pub or a meal out, yet this money could grow in value over the coming years and fund multiple nights out down the line. Sacrifice now and celebrate later."
Coatsworth urged those preparing for retirement to get rid of their cash and put it in a pension as soon as possible.
He said: "While 10 per cent of adults having no cash savings is worrying, it’s also worth considering those individuals who have too much cash.
"Having money for emergencies is sensible financial planning, yet hoarding cash that could be generating better returns via investing isn’t a sensible way to put your hard-earned money to work."
