The UK pensions system is at a turning point. While Defined Contribution (DC) pension assets are projected to reach £800 billion by 2030, this impressive figure masks a concerning reality. Despite this substantial growth, a significant portion of the population is not adequately preparing for retirement. Currently, 38% of the working-age population, representing 12.5 million individuals, are under-saving. This means that a large number of people are at risk of not having sufficient funds to support themselves in their later years. Furthermore, only 8% of the UK population are taking financial advice, leaving them to make crucial financial decisions on their own and risking serious long-term consequences.

Our recently published whitepaper, Mind the Gap: Bridging the UK's pension divide, takes an in-depth look at these challenges, why they’re happening and how AI-powered customer experience solutions are the answer to driving positive change. While you can read the full piece here, this article outlines our key findings and insights.

Why are people falling short?

Several factors contribute to this shortfall in retirement savings. One of the primary reasons is the rising cost of living, which puts significant pressure on household budgets. As everyday expenses consume a larger portion of income, many people find it challenging to prioritise and allocate funds to long-term savings such as pensions. This immediate financial pressure often forces individuals to make difficult choices, often at the expense of their future financial security.

Another key factor is the widespread lack of financial literacy – many people simply do not have a clear understanding of how pensions work, the importance of saving early, or how to make informed decisions about their retirement planning. This lack of knowledge can lead to disengagement and a failure to take the necessary steps to secure their financial future.

The decumulation challenge

The challenges associated with pensions do not end when people reach retirement age. In fact, the decumulation phase, when individuals begin drawing down their pension pots, presents its own unique set of complexities and potential pitfalls. This stage requires careful planning and decision-making to ensure that savings last throughout retirement.

However, a significant number of people navigate this critical phase without professional advice or guidance. Research indicates that 52% of individuals access their pensions without seeking any form of advice, which can lead to uninformed and potentially costly decisions. Without proper guidance, retirees may struggle to manage their funds effectively, potentially leading to a faster depletion of their savings and increased financial insecurity in their later years.

Closing the gap with customer experience

The pensions market is complex, but it’s clear that providers have a crucial responsibility to guide their customers towards positive retirement outcomes. At the heart of this — before anything else — is improving the customer experience, which revolves around three interconnected themes: empathy, engagement, and empowerment.

• Empathy involves understanding customers' financial situations and the emotional weight of their decisions, allowing providers to create resonant experiences.
• Engagement entails moving beyond generic approaches and tailoring interactions to individual mindsets and life circumstances.
• Empowerment means providing customers with the tools and confidence they need to understand their options and take control of their financial futures.

By prioritising these three elements, providers can significantly improve customer outcomes and foster long-term trust.

Why technology is now essential to pension engagement

Many pension engagement strategies still rely on traditional education-led approaches, such as written statements or generic webinars, to increase awareness and understanding. However, many of these methods often fail to drive meaningful behavioural change or resonate with individuals on a personal level, and often rely on the end user being already engaged.

The solution isn’t more information; it’s a smarter, more intuitive design. That means personalised content, relevant nudges, and digital tools that build confidence.

This disconnect between awareness and action lies at the heart of the engagement problem — and it’s where digital technology can make the biggest difference. While some forward-thinking providers have stepped up with mobile pension apps, even these solutions haven't fully cracked the engagement code. Meanwhile, many others are still struggling with clunky web platforms, or worse, relying on slow, paper-based processes and human support that simply can't scale. 

Providers need to focus on offering continuous, interactive engagement and empowerment that evolves with the user — building familiarity, trust, and action over time. It’s about meeting people where they are, delivering timely insights, and designing journeys that work for a broader, more diverse range of savers.

Moving beyond apps: The agentic AI solution

Artificial intelligence (AI) is arguably the most powerful solution to revolutionising the way people engage with their pensions, by giving providers the opportunity to offer personalised advice and support at scale, making it possible to reach a large audience with tailored solutions.

Agentic AI, in particular, can play a crucial role in guiding individuals through every stage of their pension journey. Imagine having access to a personal retirement coach powered by AI, capable of understanding an individual's unique circumstances, financial goals, and risk tolerance, and then providing customised guidance and support. This level of personalisation can significantly improve engagement, build trust, and empower individuals to take control of their financial futures.

Customer experience is a design problem

Solving this challenge presents a significant growth opportunity for providers, but to do so needs a design-led approach focused on deeply understanding your customers through three core elements: Empathy, Engagement and Empowerment. Technology – and particularly AI – of course plays a crucial role, but doesn’t replace the need for empowered advisers. The future will be hybrid: a combination of traditional digital interfaces, agentic AI, and human touchpoints to create hyper-personalised experiences based on an individual's aspirations, circumstances and preferences.

Download our whitepaper to get a more comprehensive view of this topic and how you can implement an actionable roadmap to bridging the gap.