The Pension Shortfall: why tracing your pension matters more than ever

Just 43% of UK households are on course for an adequate retirement income^[1], and even high earners could face a shortfall of over £60,000 if they want to maintain their current lifestyle^[2].

This is what’s known as the pension gap or pension shortfall.

It refers to the difference between the money you’ll need to live the life you want in retirement, and what you’re actually likely to have.

It's a growing problem, especially for those in their 30s, 40s and 50s who’ve worked across multiple jobs and may have several pension pots scattered in various places. In fact, more than a third of Brits (36%) say they’ve already lost track of at least one pension.^[3]

With the cost-of-living squeeze demanding financial attention, as well as the usual busyness of life, it can be hard to find the space and time to think seriously about your retirement (especially when it’s still decades away).

This is why tracing old pensions and consolidating them could be an effective way of beginning to close the gap.

What’s more, it’s easier to do than you might think.

Jump to:

• Understanding the pension gap issue
• Recommended UK retirement income brackets
• Key factors driving the pension gap
• Why pension tracing is your first line of defense
• How to trace your pension
• Conclusion

Understanding the pension gap issue

Simply put, the pension gap indicates the shortfall between the income you’ll need in retirement and what you’re actually on track to receive. This pension shortfall looks to be a potential issue for a whole variety of earners, both low and high.

Part of the problem is rooted in just how easy it is to underestimate what is needed for a comfortable retirement.

Working to close the gap sooner, rather than later, could increase your chances of having the lifestyle you want down the line.

Recommended UK retirement income brackets

So, how much will you actually need to retire comfortably? According to the Retirement Living Standards^[4], it depends on the lifestyle you want — and whether you’re planning for just you or as a couple.

For a single person who has paid off a mortgage by retirement age, the estimated annual cost of retirement is:

• £13,400 for a minimum lifestyle (covering essentials with little left over)
• £31,700 for a moderate lifestyle (a few treats and holidays)
• £43,900 for a comfortable lifestyle (more financial freedom and luxuries)

For a couple who have paid off their mortgage by retirement, these figures rise to:

• £21,600 (minimum)
• £43,900 (moderate)
• £60,600 (comfortable)

The full State Pension in 2025 pays just under £12,000 a year, so while it helps, it only gets you so far.

A couple receiving the full amount may just about cover the minimum standard of living, but anything above that will likely rely on workplace and personal pensions.

Knowing these benchmarks can help you set clear goals — and tracing any lost pensions could be a savvy smart first step in getting closer to them.

Key factors driving the pension gap

A few decades ago, you would have heard very little (if anything) about the existence of the pension gap — so what’s driving it now?

Well, it’s complicated. And while it may be tempting to blame under-saving, the reality is more nuanced.

Rising living costs and inflation rates have made it harder to prioritise pension contributions for many. At the same time, wage growth has struggled to keep pace with inflation, making the standard auto-enrolment contributions feel less effective than they might have once upon a time.^[5]

Modern working patterns don’t always help, either. Career breaks, freelancing and gig work often mean patchy pension contributions rather than steady saving.

Even for those consistently in full-time work, jumping between jobs can lead to abandoned pension pots (which may, in turn, be eaten into by management fees — while spreading this money out across multiple pots can limit the potential for compounding).

A lack of awareness around tax-efficient tools, like salary sacrifice or personal pensions, as well as the benefits of diversifying with ISAs, only adds to the problem. Closing the gap starts with knowledge — and knowing where all your pension pots are is a crucial first piece in the puzzle.

Why pension tracing is your first line of defense

If you’ve changed jobs a few times over the years, chances are you’ve left a pension or two behind. But don’t panic, this is incredibly common.

In fact, over £31.1 billion is currently sitting in lost or forgotten pension pots across the UK, with the average pot worth nearly £9,500. And for those aged 55–75, that figure rises to over £13,600 ^[6].

Needless to say, that’s money that could make a real difference to your retirement plans — especially given the potential for this money to grow and compound over time.

When the prospect of saving more seems daunting or even unfeasible, tracking down your existing pension pots could be a great way of reducing pension shortfall. It’s not just about boosting your balance, either — it gives you a clearer view of your overall progress and helps you plan with confidence.

Take the case of Terry Wilsher who had been carefully saving for his pension for decades, but hadn’t quite managed to keep track of the pensions he had with various jobs. After using a pension tracing service, he discovered he had a £30,000 pension pot he didn’t even know existed — an amount that could easily have been forgotten forever ^[7].

How to trace your pension

If you’ve ever moved jobs, changed address or switched pension providers, there’s a good chance you’ve not kept tabs on one or more of your pensions.

The good news? It’s never been easier to start the search.

Begin by listing your employment history, as old payslips or HR documents can help jog your memory. If you’re unsure who your provider was, the government offers a free Pension Tracing Service where you can search by employer name.

For older or more complex cases, especially where a company has closed or merged, it may be worth considering a professional pension tracing service. We’ll be covering this in more detail in a future guide.

Once you’ve found your pensions, the next step is to start reviewing your options. You might consider consolidating your pots, adjusting your contributions, or seeking formal financial advice to plan more effectively for retirement.

If you are looking to consolidate your pensions, remember to take into account these pros, cons and considerations.

Pros of pension consolidation:

• Pension consolidation can help to eliminate doubling up (or worse, triple or quadrupling up) on provider management fees.
• With all your money in one place, compounding could be more effective in the long-term with more money to make returns on, and the snowball effect which comes with that.
• Less admin and oversight required — with all your pensions in one place, it’s much easier to keep tabs on your pension pot and make changes if required.

Cons and considerations:

• Some providers may charge exit penalties, so always check this before deciding to transfer your pension.
• You could lose potential benefits offered by a certain provider – or – if you’re with a defined benefit scheme, you may forfeit your entitlement to a guaranteed income in the future.
• Make sure you’re selecting a provider with the best fees and investment strategy/options for you.

Every pound counts, and reconnecting with forgotten pensions could make a real difference to the lifestyle you can afford in later life.

Conclusion

The pension gap is real, and for many, wider than expected.

The good news is that it’s not too late to take control. Whether you’ve switched jobs a few times or just haven’t looked at your pension in years, tracing and reviewing your pensions could help you find a way back to your retirement goals.

If you’re considering transferring to a new provider, why not explore a Wealthify Self-Invested Personal Pension (SIPP)...

• Our SIPP is easy to start and fully managed by our investment experts — simply choose your investment style and amount, and our team will manage everything for you, including applying the 25% tax relief on eligible personal contributions.
• We keep our fees low and transparent, with an annual management fee of 0.6% for pension balances up to £100,000, reducing to 0.3% on any portion above that (and fees are calculated monthly so there aren’t any hidden surprises).
• You can contribute in a way that suits you, whether by Direct Debit or in one-off payments — with our award-winning UK-based Customer Care Team available by phone, email or secure message. 

References

1. High Earners Risk Retirement Pension Shortfall | Money Week
2. Government urged to incentivise high earners to boost pensions amid large adequacy gaps | Pension Age
3. Survey conducted amongst 1000 working-age (16-65) pension holders in the UK via 3Gem between 27th June and 1st July 2025.
4. Retirement Living Standards
5. UK Wage Growth vs Inflation | Statista
6. Brits Missing 31.1bn in unclaimed pensions | Pensions UK
7. I found a 30k pension pot I didn't know existed | MSN