A young person disabled before entering the workforce today could retire with a pension pot £245,327 smaller than their non-disabled peers, according to a new report.
A person disabled in childhood and then working part-time faces a final pension pot of £109,886 - compared to £355,213 for a non-disabled full-time worker: a gap of £245,327, according to the report from PensionBee.
The earlier a disability occurs, the greater the long-term financial penalty was.
A worker disabled from age 30 and moving to part-time work faces a final pension pot of £207,328, generating a disability pension gap of £147,885. Whereas, a worker who was disabled from age 50 and moving to part-time work faces a final pension pot of £313,766, generating a disability pension gap of £41,447.
The majority of the 900 disabled Britons surveyed by PensionBee had considerable worries about saving for retirement. Over nine in ten (91%) said they worry about their future financial security with 84% saying disability has negatively impacted their ability to save.
Of those surveyed, 48% had no pension provision beyond the State Pension. Over half (52%) who did have any retirement savings had pension savings of less than £10,000.
Earlier this month the Second Pensions Commission interim report warned that disabled people are among the groups facing persistent structural barriers to pension saving, and that half of disabled people have no pension wealth at all at age 46.
The Commission found that almost half of working-age people are not saving into a pension in a typical month and cautioned that current automatic enrolment arrangements leave around 4 million employees outside pension saving altogether.
One in four people in the UK are now disabled, according to the Office for National Statistics, up from one in five a decade ago.
The Government is currently conduction research into the lived experience of disabled people, and how disability affects their ability to learn, work and earn.
PensionsBee is calling on the Timms Review to remove the £10,000 automatic enrolment threshold, introducing a disability pension credit, and requiring that any reform to disability benefits be assessed for its impact on retirement income.
Becky O’Connor, head of pensions at PensionBee, said: “Disabled people face a ‘quadruple whammy’ affecting their retirement prospects and needs: constrained earnings and reduced labour market participation; the need to work longer despite health limitations; likely higher care costs later in life; and a greater likelihood of renting rather than owning in retirement.
“9 in 10 disabled people worry about their financial future. Sadly, that anxiety is rational, and demands a policy response that goes beyond short-term benefit reform.
“The Timms Review is an opportunity to recognise the ramifications of pension policy as well as welfare provision for disabled people, and to offer structural support that can ultimately reduce poverty and hardship for the long term for this financially vulnerable group.”
PensionsBee surveyed 900 disabled people about their long-term financial situation in April.