‘I thought pensions were dull. Now I have a £1 million pot’

“I didn’t have any interest in pensions at all,” says Ann Parker, 65, from her home in Solihull, West Midlands. “I heard the word and my ears shut. It’s too complicated. I don’t understand it. But my husband and I realised we had quite a few pensions all over the place so thought we better do something.”

Parker knows about managing money. She built a career as a senior buyer for blue chip companies, including Barclays. She knows about planning ahead too – running her own business as a longevity coach, “enabling people to live better longer”. None of that stopped her feeling adrift from her long term savings. And she is far from alone.

Just 30% of women feel empowered to make decisions about their retirement and 41% of men, research from pension provider Scottish Widows found. Consequently only 40% of women say they actively make decisions about money for retirement, compared to just over half of men.

Gender pension gap

This gulf in approach could be one reason women, on average, have much smaller pension pots, though the main cause remains the financial hit of time out of the workplace to raise a family and other caring responsibilities. Most recent UK government data, from 2020 to 2022, estimates average pension wealth at age 55 to 59 stood at £81,000 for women but £156,000 for men. A gender pension gap of 48%. Women’s pensions are worth roughly half men’s.

Susan Hope, retirement expert at Scottish Widows says: “With 60% of women not knowing who will manage their savings in retirement, we need to give women the tools to understand their bigger picture and to understand what levers they can potentially pull to close their own personal gender pension gap.”

Is pension consolidation worth it?

In Solihull, Parker would rather walk Trixie and Benny, her Labrador and Border Collie, than do pension admin. Like millions of others, the catalyst to act at all was pension freedoms, introduced in 2015 to let savers spend their retirement pots as they choose, driving a novel wave of excitement about retirement income.

“After that I consolidated all my pensions. It has proved very lucrative. In nine years it has tripled in value,” she says. Her pension pot is around £1 million now. That’s after Parker took out the 25% tax-free lump sum to spend on her home and a luxury holiday to the Maldives.

The cost of retiring comfortably in a similar style is on the rise – at £43,900 a year for a single person and £60,600 a year for a two-person household, according to the latest Pensions UK analysis. (These figures are after paying tax, so you technically need more). For this level of retirement income, someone living alone would need a nest egg of £540,000 to £800,000, if using it to buy an annuity for a guaranteed income. For two people sharing bills it would be £300,000 to £460,000.

Higher income tax pensioners

To get her more than comfortable £1 million pot, Parker controversially disregarded the common rule not to give up her final salary (defined benefit) pension with its guaranteed income for life. “I had to pay for financial advice about that. A couple of thousand pounds and a bit of a joke, because the advice is always, “don’t transfer” – that there’s no risk leaving it where it is, whereas if you move it, there is risk, and the adviser doesn’t want any comeback,” she says.

“We ignored his written advice, and did consolidate and it turned out fine.” Parker now has a financial adviser managing her money whose advice she does listen to and benefits from. She doesn’t know how she is invested.

Now it’s “a bit of a battle” to stay under the higher tax bracket, she says. As of mid-2025, more than one million pensioners were paying the higher rate tax (40%) or additional (45%) income tax rate, a figure that has doubled in four years due to frozen tax thresholds and rising state pensions.

“It stings to have to give 40% or more to the chancellor if we take out a larger amount in excess of day to day living expenses,” Parker says. Luxuries Parker can enjoy, she admits, only because she spent her professional life mainly at large global companies with generous pension schemes. “We’re spenders rather than savers,” she says, “left to our own devices we’d probably be flat broke”.

‘Money is a massive form of anxiety’

Counting the pennies is a current reality for Niamh Fagan, 27, a Swansea university materials engineering PhD student, at the other end of the spectrum by age and finances. After studying for eight years she is almost done. Between her doctoral stipend and time working in industry in her field, she manages on around £22,000 a year – less than minimum wage which is £24,784 from this April.

“Money is a massive form of anxiety. There’s a lot of pre-planning, budgeting. PhD funding runs out before your final submission date. It’s very normal for you to be working on it longer than you’re paid for it. From the start of my course, knowing how difficult the job market is at the moment, I was like, oh, I need to maximise savings to get this done and to survive until I get employment,” she says.

Savings by age

Fagan’s boyfriend has recently moved in to help share the bills with her. Factory cleaning, pizza delivery and admin in a GP surgery have all helped make ends meet. With a frugal lifestyle, and a year working full-time for a large industrial employer as part of her course – “a massive help” – she has managed to save £10,000 in a cash account.

That’s not bad. In terms of average savings by age 25 to 34 year olds in the UK have just £3,544. More than 12% have nothing and just over a fifth (22%) have less than £100. The median amount a Brit has in their savings is only around £9,633 – not much more than is necessary for an emergency fund that covers essential spending for several months.

Which is exactly how Fagan is using her buffer until her first wage at the end of January. Social media is awash with ‘finfluencers’ trying to entice young people into everything from fairly vanilla index funds to the Wild West of cryptocurrency; she has, she says, no interest in listening to them.

“I think the commercialisation of financial advice is concerning, especially with how, in order for them to make a living, usually they need sponsorships, so then they’re plugging products that may not be in people’s best interest,” she says.

Rise of the Gen Z investor

Fagan may be an outlier. Across 13 economies, the World Economic Forum’s latest Global Retail Investor Outlook found 30% of Gen Z start investing in early adulthood – compared to 9% of Gen X and 6% of baby boomers. By the time they enter the workforce, 86% of Gen Z have learned about personal investing versus 47% of boomers.

In Swansea, Fagan’s hope of “one day being able to put a deposit down on a little house, maybe in 10 years”, could be bolstered by taking a bit of risk. Investing in the stock market for the long-term beats cash over more than 100 years of data. But she is so far unconvinced.

“I tried investing once and it just felt like more complicated gambling,” she says. “I used one of those trading apps and didn’t invest very much at all, in Google and Gregg’s because they’re companies I know, and Gregg’s had just opened a drive through nearby.”

Will my pension still exist?

Forty-two percent of under-30s like Fagan are currently at risk of poverty in retirement, according to Scottish Widows. The only other age group with an outlook this poor is 60 to 64-year-olds – however levels of home ownership among this group are higher than is expected for Gen Z at the same age, making many Boomers at least asset rich.

Fagan has, like a steady 10% of those eligible, so far opted out of pensions she’s been auto enrolled into as part of any short-term or part-time contracts because, she says, she needed the money today.

She intends to join her company pension scheme now she is starting full-time sustained employment. But like many of her generation she is pessimistic about the good it will do her – 46% of Gen Zs do not believe even the state pension will exist by the time they retire, according to the Pensions Policy Institute.

“I’m not necessarily worried about my pension, because I’m unsure that I’ll ever get to retire with the way the pension age limits are going up,” she says. “If I do get to retire, God knows how you’d access money saved by companies that won’t probably exist anymore.”

Convincing wary savers like Fagan to trust financial services for the long haul with their hard won money will be no small battle for both industry and policymakers’ ongoing efforts to boost Britain’s pension coffers.