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One in seven people retiring this year have no pension

Paloma Kubiak
Written By:
Paloma Kubiak
Posted:
Updated:
27/04/2016

One in seven people retiring this year have no pension and will be either totally or heavily reliant on the State Pension to provide a regular income in later life, a study suggests.

While the new flat rate State Pension rose to £155.65 a week for those retiring on or after 6 April 2016, the figure is still £27.33 a week below the Joseph Rowntree Foundation’s minimum income standard for a single pensioner, the report by Prudential said.

That means a pensioner relying fully on the new State Pension will have an annual income of nearly £8,100 a year – a significant shortfall on the JRF standard of over £1,400 a year.

Even people with retirement savings of their own will rely heavily on the State Pension. The study found it will account for more than a third (35 per cent) of the average retiree’s income.

Women estimate they’ll receive on average 41% of their retirement income from the State Pension – compared with 31% for men.

Women are also three times as likely as men to have made no pension provision –22% compared with 7%.

Regionally, those expecting to retire this year in Wales are the most likely to have to rely on the State Pension or other savings, closely followed by those in the East Midlands and Eastern England.

By contrast, those in London will be the least reliant on the State scheme.

Vince Smith-Hughes, retirement income expert at Prudential, said: “Even those who receive the full new flat-rate State Pension will find that it alone doesn’t provide the level of income required to sustain a comfortable retirement.

“However, given the significant contribution the State Pension makes to most retirees’ incomes it is important to make sure people do everything they can to make sure they qualify for the full amount – for example by making voluntary National Insurance contributions to cover any career breaks.

“The clear lesson from our figures for anyone saving for retirement is that someone expecting to live in any degree of comfort needs to have made some sort of pension provision of their own. There are very few better alternatives than saving as much as possible as early as possible in our working lives and the majority of people will benefit from professional financial advice when planning for retirement.”

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