20% Of People Retiring Today Rely On Their State Pension Alone

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by: bluespeckmedia
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Date: Tue, 12 Apr 2011 Time: 1:18 PM
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If you're under 30 and love your job you're probably too busy working and enjoying life to think about your pension. The prospect of working until you are 70 or 80 perhaps doesn't faze you either. If you are between 45 and 60, your pension is probably already giving you the odd sleepless night. This year's 'Class of 2011' study by the Prudential highlights just how serious the pensions crisis is getting and there is no indication that 'things can only get better'.
Lack of Awareness
The study highlights some disturbing facts. Almost 1 in 5 respondents to the survey expect to rely wholly on the State Pension, yet of those surveyed at least a quarter over-estimated the value of this pension while almost 10% had no idea of its value. The State Pension, in case you were wondering is currently £97.65 per week, though there is a small increase expected soon. In addition to the pension additional benefits such as the Winter Fuel Payments scheme, Pension Credit and concessionary travel schemes make life a little easier for those relying on state support in their old age. Successive governments have tried hard to persuade people to make private provision for their retirement. The simple fact is that we are living longer and enjoying better health. The state pension which is funded by the working population via their National Insurance contributions is already struggling under the weight of an increasingly elderly population.
Average Expectations
The survey illustrates that we have been listening, however. Amongst those planning to retire this year the figures show that the majority have a number of sources of pension income. The state pension will account for 37% of peoples' pension income, on average. While this is certainly good news, the percentage is probably higher than the government would like to see. The average income from pensions, according to the survey, will be £16, 559 per annum. While this may seem reasonable it will be a big drop in income for many people.
Save now and don't pay later
The survey also highlights a number of inequalities in pension provision. Regional and gender differences are the most significant. Almost 30% of people in Wales will rely on the State Pension, much higher than the national average, while women continue to represent a significant group of those retiring on low incomes. This last finding is disturbing when you consider that women's life expectancy is longer than men's. As the report's authors point out, there is really only one lesson to be learned from the study. The sooner you begin to save for retirement and the more you save, the better your chances will be of enjoying your hard earned retirement. Taking financial advice early in your career can make all the difference at the end of it.

About the Author

John T Hughes is an expert financial writer with experience in the investment and retirement markets. John is resident writer at Independent Financial Advisor.co.uk, a site specialising in finding you expert advice on retirement products such as pension advice.