The beginning of the 2024-25 tax year saw an 8.5 per cent increase in the state pension – in other words, an extra £900 a year for pensioners.
That’s great news for the current crop of retirees, but what about upcoming generations?
Well, many younger adults aren’t confident that they’ll receive any state pension at all in later life.
In fact, a poll by Phoenix Group’s longevity think tank Phoenix Insights has found that half of under-50s don’t believe a state pension will exist by the time they retire.
It’s understandable that this age group isn’t feeling hugely confident about what they’ll receive in the future, given the wider debate about the state pension that’s currently rumbling on.
With people living much longer these days, providing a state pension is becoming much more expensive for the public purse, especially when you factor in the government’s commitment to the triple lock.
Add to that the fact that the state pension age is set to increase from 66 to 67 between 2026 and 2028, and could go up again before today’s younger adults even start thinking of retirement, and you can see why under-50s aren’t hopeful.
But as Patrick Thomson, Head of Research and Policy at Phoenix Insights, puts it, the state pension is “an important intergenerational social contract”.
As a result, any moves to scrap the state pension altogether would certainly be hugely controversial, especially among this age group.
Indeed, 84 per cent of adults of all ages said they believe that providing a state pension is an essential role of the government.
In addition, 87 per cent said they think the state pension is there to make sure every single person has a minimum level of income when they retire.
“The state pension matters to all of us,” Mr Thomson continued.
“It is the biggest single part of the social security system and has been the foundation for many people’s retirement income for over 75 years.”
But while the level of support for the state pension came across loud and clear, the survey also highlighted some significant gaps in people’s knowledge.
For example, more than a fifth of over-55s admitted they didn’t know their state pension age – and many of those polled said they didn’t know what the triple lock is.
That’s a real concern, as many of these people will be hoping they’re in the last decade of their working lives and wanting to enjoy a retirement free of financial worries.
Another notable finding was that nearly one in five adults across all age groups believe they could live on the state pension alone in retirement.
The full rate of the new state pension is £221.20 a week, and that’s clearly not enough to cover all your living costs and leave you with enough left over to enjoy hobbies, pastimes and luxuries.
That’s why you should make sure you have plans in place to supplement the state pension, such as workplace pensions, private pensions and other investments, and ensure that these make up the bulk of your income.
Then you can set yourself up to enjoy a much more comfortable lifestyle during your retirement, and ensure you have the means to live the kind of life that you want and deserve.
If you have any questions about saving for retirement and making the most of your pensions, get in touch with our specialist team of financial planners.
We’re here to help and will be happy to speak with you, so get in touch and take charge of your retirement planning today.
Sources
https://www.moneymarketing.co.uk/news/under-50s-doubt-future-of-state-pension/
