03 June 2025
5 min
Pension adequacy is still a big concern, especially for low earners. Housing costs could be the key factor that makes or breaks meeting even the Minimum standard in retirement.
The Pensions and Lifetime Savings Association (PLSA) provide guidance through their Retirement Living Standards (RLS), which outline the levels of expenditure required to achieve different standards of living in retirement.
The RLS, launched in 2019, helps members understand how much money they'll need when they retire and what standard of living that will provide. They are categorised into Minimum, Moderate, and Comfortable standards, based on a "basket of goods" approach that reflects the cost of goods and services typically purchased during retirement. The latest June 2025 update reflects a reduction in the cost of achieving the Minimum standard, while the Moderate and Comfortable standards have increased slightly.
For those planning their retirement, the PLSA provides clear guidelines:
For a Minimum standard of living, you'll need £13,400 per annum.
For a Moderate standard, which offers more financial security and flexibility, you'll need £31,700 per annum.
For a Comfortable standard, which allows for more financial freedom and luxuries, you'll need £43,900 per annum.
We've incorporated the latest RLS guidelines, market conditions up to March 2025, and the increase in the annual state pension into our latest analysis. Using our Guided Outcomes™ model, we categorise the likelihood of meeting the RLS for various combinations of salary and total contribution rate with a red/amber/green colour scale. This model helps members assess their chances of achieving their desired standard of living in retirement.
Our analysis shows that most members who get the full State Pension are on track to reach the Minimum Retirement Living Standard of £13,400 a year. However, housing costs remain a significant barrier for lower earners in determining whether or not they achieve the Minimum standard. Simply paying rent in retirement could seriously reduce someone’s chance of reaching even this basic standard, especially for lower earners or those contributing less. For average earners, a realistic goal may sit somewhere between the Minimum and Moderate standards, but they will need to pay in more to have a fair shot at the Moderate standard. Meanwhile, the Comfortable standard is out of reach for most. Find out more in our publication below.
Our call to action for trustees, providers, and employers:
Help members set a retirement income target. This can be a powerful way to improve engagement, and the RLS offers a useful framework for setting targets aligned with likely spending patterns.
Help members understand their State Pension entitlement and how it affects the personal pension savings they’ll need for retirement.
Give members the tools to track their progress against their target, and the insight to know what actions they can take to improve their retirement outcomes.
Most importantly, communicate clearly and regularly. Too often, pensions are seen as complex or distant concerns. But with the right tools and guidance, members can gain confidence in their financial future. Trustees, providers, and employers each have a vital role to play beyond just managing pensions. They can empower savers to make informed, timely decisions.
Download our publication to learn more. For more information on DC pension adequacy and to discuss improving member outcomes, please get in touch.
This communication has been compiled by Hymans Robertson LLP® (HR) as a general information summary and is based on its understanding of events as at the date of publication, which may be subject to change. It is not to be relied upon for investment or financial decisions and is not a substitute for professional advice (including for legal, investment or tax advice) on specific circumstances. HR accepts no liability for errors or omissions or reliance on any statement or opinion. Where we have relied upon data provided by third parties, reasonable care has been taken to assess its accuracy however we provide no guarantee and accept no liability in respect of any errors made by any third party.
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