Half of Brits don’t know who’s entitled to a state pension
Many people across the UK remain unaware of the finer details of the state pension 75 years after its launch, research from a pension provider has revealed.
A survey of 4,000 adults by Royal London has found that over half of those asked yet to receive a state pension didn’t know who is entitled to a state pension. More worryingly they also thought that everyone was entitled to the full state pension, not recognising that it’s a contributory system. In addition, almost a third of people thought they got their state pension automatically, and would not need to make any application to receive it.
Almost two fifths of people thought that men and women were entitled to the state pension at different ages. Yet the age where men and women can start to claim their state pensions was equalised in November five years ago.
Meanwhile, only 46% of those who took part in the survey, who are below the state pension claiming age, knew that men and women would receive the same pension amount if they made the same amount of National Insurance contributions. A similar number of respondents were not aware if married couples or individuals received the same or different amount of the state pension. The current rule is that there is no difference in what you are entitled if you are married or not.
Confusion over state pension amount
Royal London’s research also showed uncertainly over how much the state pension actually pays. When asked, the average amount respondents thought the state pension paid was £534 per month, around £350 less than the current full monthly amount of £886.
This is despite one in ten people not yet retired saying they would live off the state pension as their main source of income in retirement. After being told that the full state pension figure was £886 per month, just under half of the respondents said that it was not enough to live on comfortably.
At the same time, 69% of the survey respondents said that they had not calculated what they would need to live on beyond retirement age. More than two thirds of those who are in the age groups of 35-49 and 50-69 have not worked out what they would require from a pension. The average monthly amount those surveyed said they would need in retirement was £1,216, which is 37% more than the full state pension allowance.
State pension sole income for one in five pensioners
Sarah Pennells, consumer finance specialist at Royal London said: “The state pension is the foundation of most people’s income in retirement, but for one in five of those who’ve retired, it’s their sole form of income.
“Living on £886 a month isn’t easy, especially currently during a cost-of-living crisis, and around a third (32%) of those we surveyed who are currently receiving the state pension told us that they’re struggling and have to supplement it with other income or savings. With the cost-of-living challenges unlikely to ease any time soon, it is concerning that some people are heading to a retirement where they won’t have enough income for a good standard of living.”
She continued: “I’d encourage anyone who has been putting off thinking about their retirement to make a start by getting a copy of their state pension forecast. Once they know that, they can work out how much income they’d need in retirement to afford the life they’d like and can begin to plan what they need to do with their finances to start to bridge that gap.
“There are plenty of free online tools and resources to help you. The cost-of-living crisis is putting extra pressure on household budgets, but relying on the state pension alone could mean many years of making very tough choices about spending for millions of people, so the more that people can do now to provision for their retirement, the more comfortable they could be in their later years.”