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MoneyWeek article - how to plug your pension shortfall

Journalist: Marc Shoffman, Freelance

ended 14. February 2025

I am writing a MoneyWeek article this morning based on stats from retirement provider Just that shows single pensioners on full State Pension face shortfall of £2,897 a year income to achieve PLSA’s ‘minimum’ retirement living standard.

A single 65-year-old would require a pension fund of about £50,000 to secure the £2,897 a year income after tax to take them up to the minimum income standard.

However, a couple who are both receiving full State Pensions will have achieved the ‘minimum’ retirement living standard of £22,400 and have an additional £604 a year income on top.

 I am looking for comments on how people can plug their pension shortfall, e.g upping contributions, checking NI record etc

3 responses from the Newspage community

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Editor
Anita Wright
Chartered Financial Planner at Ribble Wealth Management
The State Pension remains a key component of retirement planning, as for many it is often the only guaranteed income source linked to inflation through the triple lock. For those looking to maximise their State Pension, plugging gaps in their NI record can be a highly effective investment. For context, paying £907.40 for a year’s worth of contributions in 2024/25 will result in an additional £328.64 annually for life, indexed to inflation. In practical terms, this means that within three years of receiving State Pension, the amount invested would have been fully returned. While the State Pension alone may not be sufficient to meet all retirement needs, it is still a crucial part of a well-structured plan. Ensuring full entitlement by addressing any NI gaps could significantly enhance financial security in later life. Advice to consumers: check your NI record to identify any shortfalls and assess whether topping up is beneficial given your financial situation and retirement plans
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Editor
Scott Gallacher
Director at Rowley Turton
You should check you’re in your employer’s pension scheme. Auto-enrolment means most should be—but ensure you haven’t opted out. Lower earners, who may not have been auto-enrolled, can still opt in and may benefit from employer contributions.

Contributing to your company pension via salary sacrifice, if offered, reduces National Insurance and boosts savings.

Maximise employer matching contributions, if available, as this is effectively free money.
Check your National Insurance (NI) record, considering voluntary contributions to secure the full State Pension—though this will, for most people, simply boost their State Pension to the maximum. Consequently, this alone won’t bridge the gap to meet the PLSA standard.

Increase personal pension contributions, or use ISAs for additional savings, to give additional funds/income in retirement.

Finally, using drawdown in retirement can help bridge the gap in the early years of retirement albeit at the cost of longer-term income/security.
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Daniel Wiltshire
Actuary & IFA at Wiltshire Wealth
Unfortunately, people may have to work for longer. Retirees can choose to defer their State Pension, which can increase the amount they receive when they eventually claim it. For every nine weeks they delay taking their pension, it increases by 1%, equating to around 5.8% per year. This uplift can help plug an income shortfall in later life, which may be beneficial for those who have no other retirement provision. However, it’s important to consider personal circumstances, tax implications, and overall financial planning before deferring.