PensionBee has used a new Pensions Policy Institute report, commissioned by the Association of British Insurers, to highlight three structural pressures on retirement savings that are not captured by conventional adequacy measures: financial support for adult children, pension wealth lost in divorce, and the long-run earnings impact of unpaid care.
The underlying report, titled ‘Pensions Adequacy: Housing, Households and Auto-Enrolment’, argues that the standard metrics of retirement readiness focus too narrowly on contribution rates and pot sizes, while systematically underweighting the obligations that reduce the capital available for saving in the first place.
The Bank of Mum and Dad and the divorce penalty
On the first pressure, the report notes that 3.6 million adults aged 20 to 34 now live with their parents, a figure driven by high housing costs and a difficult graduate labour market. Where that cohabitation involves parents providing financial support rather than receiving bill contributions, the household may appear adequately funded on paper while the parent is silently drawing down retirement capital or deferring contributions.
Maike Currie, VP 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 divorce finding is starker. The report found that more than a third of divorcees did not know the value of their own pension at the point of separation, and only 11% of those with an undrawn pension made arrangements to share it. The outcome is predictable: divorced women consistently hold less pension wealth than their married counterparts, and the gap widens in the decade before retirement age as lower lifetime earnings, career gaps and early pension drawdown compound.
Pension sharing orders have existed in England and Wales since 2000, and the Pensions Advisory Service offers guidance on their use. Yet uptake remains low, suggesting that awareness and access to specialist legal advice at the point of divorce remains insufficient, particularly outside the high-net-worth segment where financial planning is more routinely part of the separation process.
The carer penalty and the policy gap
The third pressure is arguably the most structurally embedded. Periods of unpaid care, whether for children or ageing parents, reduce National Insurance contributions, interrupt salary progression and lower the auto-enrolment base on which both employee and employer contributions are calculated. The PPI report argues that state-funded pension top-ups during recognised caring periods, or contribution credits analogous to the existing National Insurance credits for carers, could partially offset this effect.
Currie described the dynamic as a dual penalty, noting that women who face slower salary progression in their thirties through the motherhood effect can then encounter a second interruption in their forties and fifties as they become the default carer for ageing parents. The timing coincides with the years when earnings, and therefore contribution capacity, should be at their peak.
The policy question is live. The government’s Pensions Review, currently in its second phase, is examining adequacy more broadly, and the Department for Work and Pensions has indicated that carer pension credits are within scope. The PPI report adds pressure for concrete proposals rather than further consultation.
Market context
PensionBee manages approximately £8.6 billion in assets under management across around 327,000 customers and is listed on the London Stock Exchange. The company has a commercial interest in raising awareness of pension adequacy, which drives consolidation of dormant pots into its platform. That framing does not diminish the substance of the underlying PPI research, but readers should note it when considering the communication channel.
More broadly, the auto-enrolment system, introduced in 2012, has increased coverage substantially but has not resolved adequacy for lower earners, part-time workers or those with interrupted careers. The three life events this release identifies are well-documented structural gaps, and the PPI’s framing of housing costs and household dynamics as underweighted variables reflects a genuine shift in how the UK pensions policy community is approaching the problem.
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