State pensioners ‘fearful’ of retirement future

Pensioners are becoming increasingly “fearful” over the future of their retirement benefit payments, according to a recent survey.

Research conducted as part of the Pensions Review found that a third of working-age Britons do not believe the state pension will exist in 30 years’ time.

In a poll of 3,000 people, 73 percent believe the current state pension does not provide enough to attain a reasonable standard of living in retirement.

Some 41 percent admit they expect to receive a “bad” income later in retirement, while 15 percent do not expect to retire until they are in their 70s.

Around 47 percent believe they will have a less comfortable retirement than their parents, according to the survey.

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State pension payments rise every year in line with either CPI inflation, the rate of average earnings or 2.5 percent; whichever is the highest.

This is under the triple lock guarantee, a Government promise to raise retirement payments annually.

Due to the UK’s high inflation rate following the pandemic, pensioners saw their annual payments exceed £10,000 for the first time this year.

It is yet unknown how much the rate increase for state pensions will be in 2024 but wil likely be confirmed in the autumn.

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Experts are sharing why so many Britons are concerned about their financial futures later in life.

Karen Barker, the head of Policy and Research at abrdn Financial Fairness Trust, explained: “Many are fearful about their future retirement, with five million expecting to retire in their 70s and 4½ million not expecting to retire at all.

“This may be because few are confident the state pension is sufficient to provide a decent standard of living or that it will even be with us in future decades.

“The public acknowledges the vital role of the state in providing a secure future, their own responsibility towards providing for their retirement, and the contribution made by their employer.

“A key question for the Pensions Review is where future funds may come from to ensure that today’s working-age individuals have good retirement outcomes.”

Jonathan Cribb, an associate director at IFS and one of the Directors of the Pensions Review, added: “A challenge for people trying to formulate a good retirement saving plan is the difficulty understanding how the pensions system works.

“Despite the UK’s state pension now being much simpler than in the past there is incredibly low understanding of the level of the state pension or how it is likely to increase over time, although there is a better understanding of the state pension age.

“Policies that aim to secure finances in retirement need to recognise the relatively low levels of understanding and engagement while giving people some flexibility to make appropriate choices for them.”

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