One in seven to rely on state pension
Prudential’s study of 8,676 UK adults finds the average person planning to retire this year will rely on the state pension for more than a third (36%) of their income.
Almost a fifth (18%) of those planning to retire this year will be below the Joseph Rowntree Foundation’s measure of poverty. A single pensioner needs an income of at least £8,254 a year to be above the poverty line, according to the charity.
Women are nearly three times more likely than men to have no other pension. A quarter (23%) of women retiring in 2013 will retire without a private pension, compared with 8% of men, the research also reveals.
In addition, 23% of people retiring this year overestimate what the state pension pays by more than £600 a year. Meanwhile 10% say they “have no idea” how much it pays.
Prudential retirement income expert Vince Smith-Hughes said: “Against a backdrop of rising living costs, the basic state pension alone is not nearly enough to provide a comfortable standard of living. While it’s a very valuable source of additional income for millions of pensioners, the state pension should ideally only represent a part of someone’s retirement income, not all of it.
“Relying on the state will see many people retiring below the poverty line this year, which shows the importance of building up a personal pension. Virtually everyone with the option of a company pension should take advantage of that, and the tax relief and employer contributions that go with it. When combined these often come to more than double the amount of pension contribution the employee has to make.”