Following a year of political unrest, war in Europe and spiking energy costs, it is no surprise that the ongoing cost-of-living crisis is dominating the news agenda. As the uncertainty looks set to continue into 2023, everyone has some decisions to make in order to cope.

As a coincidence, this downturn has taken place at the same time as the ten year anniversary of auto-enrolment (AE) pensions, a government measure brought in to help people save for their futures, through good times and bad. But several new pieces of research from Barnett Waddingham have highlighted how the ongoing economic crisis has seen many people cut back on their retirement planning to keep outgoings down.

As we move further into the new year, we wanted to present the findings our new research has unearthed, and use them to highlight the key considerations employees, employers and the Government need to make to protect pension provisions in the months and years to come. 

The Employee


Employees are saving less to cope with the cost-of-living crisis.


  • 6% of people are planning to reduce their workplace pension contributions to keep up with the cost-of-living
  • 30% of UK consumers are dipping into their savings, and 12% are relying on their credit card for everyday expenses
  • Almost half of consumers are using a savings account to save for retirement (45%)

Key considerations

Cutting define contribution (DC) pension contributions is understandable when the strain on income is high. It provides an immediate boost, with the consequences often not felt for decades. But taking these short-term wins can really come back to haunt you near retirement, when the options for increasing your pension pot are limited.

A better alternative may be to look at slightly reducing your pension contributions, by 1% or 2%, rather than dropping them by 5% or 6%. This will still provide a boost, while not severely jeopardising your pension savings.

Our research shows that many are turning to alternative saving options. Almost half the people in our survey are using a savings account to save for retirement (45%), outside of any pension saving. Concerningly, 25% are using a cash ISA, and a further 5% are even using cryptocurrency. 

The added flexibility these options provide may appeal in the here and now, but our research also highlighted that UK equities have consistently outperformed cash over the last 20 years, as has a standard DC pension portfolio. So if you do find you have some income you want to put away for the future, a pension plan is still one of the most viable options.

Next step

Explore the benefits package your employer is providing – this may contain many options that can save you money on other outgoings, easing the need to reduce your pension savings. 

The Employer


Despite ten years of auto-enrolment, almost half of UK adults aren’t confident they’ll have enough saved for a comfortable retirement.


  • Participation in workplace pensions has increased from 55% in 2012 to 88% in 2021
  • Despite this, a massive 46% of people we surveyed are still not confident that they’ll have enough for a comfortable retirement. This rises to 51% for women, 53% of 35-54 year olds and 68% of those with no pension other than the State Pension
  • 13% of working Brits are excluded from auto-enrolment due to their income structure – this is true of almost one in ten full time workers (9%)

Key considerations

Organisations are dealing with their own crisis as well, as the “cost-of-doing-business” continues to soar. But they can’t take their eye off the ball when it comes to the emotional and financial wellbeing of their employees.

Employers play a major role in how their employees cope during economic downturns, and not just in the obvious ways like pay. Providing an environment where employees feel confident to invest in their retirement plans is not only the right thing to do, but can incentivise them to stick with a company that has shown them support even when times are tough.

The best course of action is to look at your employee data and find out how you could be helping those who work for you. Properly analysing your Employer DNA can open up insights you may have otherwise missed. Could a small increase of pay for your lowest paid employees allow them to qualify for auto-enrolment pensions? Are their affordable benefits that you could offer that would help your employees save? Would your employees benefit from some financial advice workshops?

All of these changes add up and can help your employees immensely. On the back of the employee – employer power shift, brought on by the pandemic, retaining your workforce is more pivotal than ever. By showing you care about their wellbeing during (and after) the cost-of-living crisis, and thoroughly analysing your data, you can go a long way in securing your talent pool through 2023 and beyond.

Next steps

Start gathering feedback from employees, ideally in face-to-face settings, to find out what they would like to see from their benefits package.

The Government


Restrictive laws are allowing too many people to fall through the auto-enrolment gaps.


  • 21% of Brits don’t have any private or workplace pensions – they will only receive a State Pension. This rises to 28% of women, compared to 14% of men
  • 13% of working Brits are excluded from auto-enrolment altogether due to their income structure
  • Of those eligible to be opted-in based on age (22 to 65), 20% aren’t paying into their DC pension at all
  • Of those entitled based on income – that is, in at least one job earning £10k a year – 11% have a DC pension which they’re not paying into

Key considerations

As our research shows that auto-enrolment has made some inroads into helping people save for retirement, but there is still work to be done. Mel Stride was appointed as the new Secretary of State for Work and Pensions in October, and while handling the fallout from the gilt market volatility in September is likely to be his biggest priority, BW is imploring him to address the gaps in the auto-enrolment laws sooner rather than later.

Too many people are being needlessly excluded due to restrictive legislation. Of the 13% of Brits excluded from auto-enrolment, 10% have one job which earns less than £6,240 a year (below the lower level of qualifying earnings - LEL), while 4% have multiple jobs all of which earn less than £6,240 a year. This is led by those in part-time work (30%) but is still true of almost one in ten full time workers (9%). It rises to 18% of those aged 55+ (and still working).

Next steps

Mark Futcher, Partner and Head of DC at Barnett Waddingham, comments: “Auto-enrolment was designed to get more people saving for retirement. At the simplest level that has worked, but the policy has by no means been a roaring success. There are two core problems: not enough people saving, and people not saving enough. 

“The auto-enrolment legislation excludes a huge number of low earners, including almost one in ten full-time workers. The Government has opted to keep the minimum earnings band at £10,000 a year, despite multiple calls to scrap it. The new Minister for Pensions must rethink this; if they don’t, it falls to employers to consider increasing remuneration to their staff to account for the lack of long-term savings."

"Separately, of the 20 million people saving into a workplace pension, the vast majority aren’t saving enough. Savings rates have plateaued at the minimum contribution level. The Government had a ripe opportunity to include a 1% employee contribution hike every two or three years, which would have moved many people towards the recommended 12% saving rate. Instead, they failed to capitalise on the success; as the cost-of-living crisis worsens, it’s arguable they’ve missed their chance."
Mark Futcher Head of DC, Barnett Waddingham

* Barnett Waddingham conducted a survey amongst 2,000 UK adults via Opinium Research. The survey was nationally representative and conducted in December 2022. Two separate surveys to 2,000 UK adults were conducted with the same question for Barnett Waddingham in June and September 2022.

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