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Millions have no idea what state pension they will receive

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29/11/2012
Nearly 30% of older workers have no idea what they will get from state pension, according to a new report from Age UK.

The report highlights the high level of uncertainty about retirement income, with 25% of those surveyed unsure about how much private pension they will receive.

31% also admit to that they don’t have a private pension.

Michelle Mitchell, Age UK charity director general, said: “Radical reform of our eye-wateringly complex pensions system is long overdue.

“With such high levels of uncertainty about our financial future, it’s clear that a simpler system – which provides greater clarity for all and makes it easier for people to plan properly for retirement – is urgently needed.”

The report comes ahead of the publication of the government’s long-awaited White Paper on state pension reform.

The paper is expected to set out detailed plans for a simpler, fairer pension system which gives people a clearer idea about what the state will provide, making it easier to plan their retirement savings.

Age UK say that there are currently 1.7m pensioners living in povert and ‘millions more destined to struggle through retirement on an inadequate income unless there is reform’.

The White Paper reforms are expected to result in higher state pensions for low earners and those with caring responsibilities and will particularly help women.

The government has said that reforms will be cost-neutral, which means that other groups, including some higher earners, will not be better off with a flat-rate pension.

However these groups will still have the advantage of a simpler system, which along with the introduction of automatic enrolment, should make retirement planning easier.

Of those surveyed for the charity, only a quarter (26 per cent) think that the state pension should be linked to people’s earnings, while around half (47 per cent) believe that it should provide a basic income to everyone who has contributed for much of their working life.

Mitchell added: “However we must not forget the millions of hard-up current pensioners who won’t benefit from the reforms.

“It’s no secret that many older people find means-testing difficult, yet the government has yet to get to grips with a benefits system that leaves the most vulnerable pensioners out of pocket by billions of pounds every year.

“Alongside its plans for future pensioners, the government must also develop a clear strategy and timetable for the reduction and abolition of current pensioner poverty.”

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