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One in six retirees relying on state pension

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by Jan Harris
One in six retirees relying on state pension

New research by Prudential shows that one in six people retiring this year will rely solely on their state pension because they have no workplace pension to supplement their income.

The Prudential’s ‘Class of 2012’ survey into the retirement plans of nearly 10,000 people highlighted that women are more than twice as likely as men to have only their state pension to live on when they retire.

Twenty per cent of women retiring in 2012 will have no pension provision other than their state pension, compared with just eight per cent of men.

The state pension will account for a third of total retirement income for the average retiree, the study found, with the other two-thirds coming from private savings, investments or private pensions.

With the current state pension for a single person increasing to £107.45 on 6 April, the Prudential said it is a “weak safety net” for people to rely on.

Retirees in the Midlands rely most heavily on the state pension, with just 60 per cent of their overall retirement income coming from other sources.

In contrast the state pension accounts for just 28 per cent of the overall retirement income for people living in Scotland, with other sources making up 72 per cent of their retirement income.

Vince Smith-Hughes, a retirement income expert at Prudential, said: “If people want to maintain their standard of living in retirement it is important that they start to save as much as possible as early as possible, and the vast majority should join company pension schemes where possible.”

Meanwhile, changes to the Pension Credit come into force this month, with many pensioners finding that the planned increase in state pension will be almost wiped out by a fall in the means-tested element of pension credit.

The threshold has been raised for this benefit, which was designed to help those with a modest amount of savings.

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News posted: April 4, 2012

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