Single retirees and the rise in pensioner poverty

LCP's research, published on 17 August 2026, finds that pensioner poverty has risen and that the rise is among single retirees. Poverty among pensioner couples has stayed broadly flat for a decade. In the data, the difference is whether a client reaches retirement in a couple or alone.

7 min read · Altro Partners, by Equity & General

18.6%
of pensioners were in poverty in 2023/24, up from 15.7% in 2012/13
LCP, 17 August 2026, from Department for Work and Pensions data
Reacting to

Pensioner poverty reversal driven by single retirees, warns LCP (Money Marketing, 17 August 2026)

An accountant records that change when it happens. When a client separates, the shareholdings move, a spouse comes off the payroll, the dividend split stops working and the marriage allowance ends. The separation reaches the accountant as a set of tax adjustments. LCP's data says it is also the point at which the client's retirement income changed.

What the research found

The paper, Being single in retirement: a key issue for the Pensions Commission?, was written by LCP partner Steve Webb and published on 17 August 2026. It uses a previously unpublished breakdown of Department for Work and Pensions data. Its findings, as reported by Money Marketing, are these.

Steve Webb's summary:

Issues such as inadequate pension sharing at the end of a relationship and the continuing gender pension gap mean that women in particular are at higher risk of poverty in old age.

Who the advice market reaches

The FCA's Financial Lives 2024 survey found that 8.6% of UK adults had taken regulated financial advice in the previous twelve months, and 13% of the self-employed. The lang cat's State of Advice Report 2025 found that the average new advised client arrives with a portfolio of about £411,000, and that the average IFA client is 59. A 51-year-old who has just separated, holds £48,000 in an old personal pension and has no plans to look at it for a decade is outside that market.

We set out the shape of the gap on the advice gap and the split of work between accountant and financial planner in who does what.

Four points in the year where a practice sees it

Each of these is something a practice already records.

1

A shareholding change

A transfer of shares between spouses, a share buy-back or a reorganisation after a separation. You handle the mechanics and the tax. The question to add is what the settlement did to each party's retirement income, and whether the pension was dealt with at all.

2

A spouse coming off the payroll

A spouse who has been on a modest salary for years has accrued little pension in their own name. When the salary stops, the auto-enrolment contribution that came with it stops too.

3

A long-term cohabiting client

Nothing changes on the file, because there was never a marriage to record. Cohabiting partners have no automatic entitlement to each other's pensions and no pension sharing on separation. LCP counts 0.8 million never-married single pensioners in the current retired population.

4

A single sole trader

No employer contribution, no auto-enrolment and no partner's pension behind them. You see the whole of their financial position once a year.

The figures for one settlement

Illustration, using a made-up client. A client separates at 52. The family home, worth £420,000 with no mortgage, is offset against the other party's pension of £390,000, and each side treats the split as equal. Our client keeps the house and a personal pension of £48,000 that has had nothing paid into it since 2019.

The settlement in the illustration

Made-up client

The family home, with no mortgage, kept by our client£420,000
The other party's pension£390,000
Our client's personal pension, with nothing paid into it since 2019£48,000
An owner-managed business

Fifteen years later the house produces no income and the client does not want to leave it. The £48,000 pension has grown and produces a small income. The other party has £390,000 of pension plus the state pension. The settlement was equal in value in 2026 but gives the two parties different retirement incomes, and a financial settlement made on divorce is difficult to reopen.

The accountant in that illustration answered the capital gains question on the property correctly. The question that was not put is whether anybody had looked at what the settlement does to the client's retirement. That question is an observation, and asking it is not regulated advice.

LCP's proposals and the Pensions Commission timetable

LCP's paper is addressed to the Pensions Commission. It proposes four things for consideration: reforming the tax relief rules on pension contributions made by a higher-earning partner, creating a pension-sharing mechanism for long-term cohabiting couples, investigating whether the 2022 no-fault divorce reforms have reduced the number of pension sharing orders, and making joint-life annuities the default option.

The Government revived the Pensions Commission on 21 July 2025. The Commission published an interim report on 19 May 2026 with no recommendations; it set out the evidence gathered so far and the areas it will examine further. Its final report, with recommendations to Government, is expected in spring 2027. Any legislation comes after that.

Structural change is therefore some years away and may not take the form LCP proposes. Clients are signing settlements this month under the rules as they stand, and no later reform will reopen them.

Two things to do this week

  1. Run one filter across your client list. Clients aged 45 to 60 who file as single, and businesses where a spouse came off the payroll in the last three years. The result is the number of your clients in the group LCP describes. The wider version of this exercise is in what a client file already shows.
  2. Add one question to the separation checklist. Where your firm has a process for the tax and corporate side of a client separation, add a line asking whether the pension has been dealt with in the settlement, and record the answer. Where it has not, say so while the settlement is still open. The same applies at the other end of a client's working life, covered in the joined-up exit.

Neither is advice and neither needs FCA permission.

Common questions

Is a client's marital status any of our business?

The change in circumstances is already your business, because it changes the numbers you are paid to get right. A separation alters shareholdings, spousal pay, dividend planning, the marriage allowance and the basis on which a property is held. The accountant is noticing a change already recorded on file, and LCP’s finding is that this change carries a retirement consequence as well as a tax one.

What does pension sharing on divorce involve?

A pension sharing order is made by the court as part of the financial settlement. It splits one party's pension rights by a stated percentage and creates an independent pension for the other party. It is one of three routes (gov.uk, Money and property when you divorce or separate). The others are offsetting, where the pension is traded against another asset such as the family home, and attachment, which redirects pension income later. Offsetting can leave one party with a house and little income decades later. The choice is made once, during the settlement.

Our client is single and self-employed with no pension. Is that not their choice?

Yes, and it remains the client’s choice. A sole trader with no employer contribution, no auto-enrolment and no partner's pension has none of the defaults that carry an employee towards a retirement income. The step your firm can take is to make the position visible once: what exists, what it produces, and what the state pension adds. The client can then decide whether to carry on as they are.

When will the Pensions Commission report?

The Government revived the Pensions Commission on 21 July 2025. It published an interim report on 19 May 2026 with no recommendations, setting out the evidence gathered and the areas needing further examination. Its final report, with recommendations to Government, is expected in spring 2027. Legislation, if any, follows that. A settlement signed in the meantime will not be reopened by a later reform.

How do we raise this without giving regulated advice?

By observing. Noting that a client's circumstances have changed and asking whether their retirement position has been looked at since is an observation about their affairs, and it is not regulated advice. Advising on, arranging or recommending a specific pension, investment or course of action is regulated and sits with a firm authorised by the Financial Conduct Authority. In an Altro partnership the accountant supplies the figures, the history and the timing, and the Equity & General financial planner carries the analysis, the recommendation and the responsibility for it.

Financial planning for your clients, alongside the accounts and tax work

Equity & General holds the FCA authorisation. There is no charge to your firm, and a named partnership director works with you from the first introduction.

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