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‘Striking’ lack of confidence in state pension

7 January 2019

The British public is bracing itself for another rise in the state pension age and have low expectations of income from it, according to new research from Canada Life.

The survey revealed that people in all age groups from 18 to 55 think the state pension age will be 70 by the time they are eligible to claim it. The findings also revealed low expectations regarding the amount people expect to receive on retirement.

One in seven (14%) think the state pension won’t exist by the time they retire  – going up to one in five (20%) of 18-24 year olds. Among those who believe the state pension is likely to still be available when they reach retirement age, as many as one in three (32%) think it will only provide negligible income, while one in five (21%) expect it to be means tested. Only a quarter of those surveyed (24%) think it will remain largely unchanged.

Andrew Tully, technical director at Canada Life UK, described the lack of confidence in the state pension as “striking”.

“Some might say it is unrealistic to expect state pension provision to remain static given we are living longer and working longer. Our research suggests people are being pretty pragmatic and are not banking on the state pension to support them in retirement.”

Despite the ‘triple lock’ guaranteeing annual increases in its value, UK adults who are not yet retired expect to receive a state pension of £150 per week when they retire, below the current full pension of £164 a week. Men are slightly more confident, expecting to receive £161 per week, compared to women who anticipate a more paltry £143 a week.

Younger generations are particularly pessimistic about how much the state pension will provide, with 18-24 year olds expecting the state pension to make up around 27% of their retirement income, compared with an average of 42% among other age groups.

The survey also found the majority of people questioned the fairness of the state pension, with 53% stating it isn’t fair compared to how much they have paid in tax and national insurance contributions, while 65% think they will put in more than they can get out. Just three in 10 (30%) still believe the current state pension is fair.

Tully adds: “People appear to be ‘pricing in’ low expectations of the state pension that will be waiting for them when they retire, most likely because they see successive governments moving the goal posts, often with good reason.

“The success of auto-enrolment will hopefully begin the bridge the retirement savings gap, as people take control and appear to be moving away from a reliance on state provision.”

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