Three Life Events That Drain UK Retirement Savings, PensionBee Warns

Digital pension provider PensionBee has drawn attention to three major life events that undermine retirement savings but remain largely invisible in standard adequacy calculations: financial help given to grown children, pension wealth forfeited during divorce, and lost earnings from periods of unpaid caregiving.

The company pointed to findings in a Pensions Policy Institute report commissioned by the Association of British Insurers. The study, titled 'Pensions Adequacy: Housing, Households and Auto-Enrolment', contends that traditional retirement readiness measures focus too heavily on contribution levels and total savings while ignoring the financial pressures that prevent people from building those pots in the first place.

The report highlights that 3.6 million adults aged 20 to 34 currently live with their parents, a trend driven by steep housing costs and a challenging job market for graduates. When parents subsidise their adult children rather than collecting rent or household contributions, the family unit may look financially stable on paper while the parents quietly deplete retirement funds or delay pension contributions.

Maike Currie, vice president of personal finance at PensionBee, said, "Retirement adequacy isn't simply about how much money sits in a pension pot. It's also about the financial commitments that continue throughout our working lives."

The research paints a stark picture of divorce's impact on retirement wealth. More than one-third of divorcees did not know the value of their pension at the time of separation, and only 11% of those with an undrawn pension arranged to split it.

The consequences fall hardest on women, who consistently end up with less pension wealth than their married peers after divorce. The gap widens in the decade before retirement as lower lifetime earnings, career interruptions, and early pension withdrawals compound.

Pension-sharing orders have been available in England and Wales since 2000, and the Pensions Advisory Service provides guidance on using them. However, uptake remains stubbornly low, pointing to insufficient awareness and access to specialist legal advice during divorce proceedings — especially outside high-net-worth cases where financial planning is routine.

The third pressure may be the most deeply embedded in the system. Unpaid care — whether for children or ageing parents — reduces National Insurance contributions, interrupts salary progression, and lowers the earnings base used to calculate auto-enrolment contributions from both employee and employer.

The PPI report suggests that state-funded pension top-ups during recognised caring periods, or contribution credits similar to existing National Insurance credits for carers, could partially close this gap.

Currie described the situation as a double penalty. Women who experience slower salary growth in their thirties due to motherhood often face a second interruption in their forties and fifties when they become the primary carer for elderly parents. This timing coincides with the years when earnings — and therefore contribution capacity — should peak.

The issue is now under active review. The government's Pensions Review, currently in its second phase, is examining adequacy more broadly, and the Department for Work and Pensions has confirmed that carer pension credits are on the agenda. The PPI report adds momentum for concrete proposals rather than further consultation.

PensionBee manages approximately £8.6 billion in assets across roughly 327,000 customers and trades on the London Stock Exchange. The company has a commercial interest in raising awareness of pension adequacy, which drives consolidation of dormant pots onto its platform. While that framing does not undermine the substance of the PPI research, readers should note the communication channel.

More widely, the auto-enrolment system introduced in 2012 has significantly expanded coverage but has not solved adequacy for lower earners, part-time workers, or those with interrupted careers. The three life events identified represent well-documented structural gaps, and the PPI's emphasis on housing costs and household dynamics as underweighted factors reflects a broader shift in how UK pensions policymakers are framing the problem.