UK state pension provision could lead to a 'dark age'

A UK pensioner collects just 31 per cent of the nation's average earnings from the government, far less than in Italy where state pension provision is 67.9 per cent of average earnings, putting it in seventh place among G7 countries.

Despite this, the majority of Britons are expecting to rely on state pension in their retirement, with 64 per cent saying they will use it to support them, according to Axa's research.

Worryingly, nearly a quarter of people believe they will also still have debts to pay off when they are pensioners, seperate to a mortgage.

Axa's research also showed that state pension provision needed to be reformed in order to avoid today's workers living in "pension poverty".

Steve Folkard, head of savings and pension policy for Axa said: "There has to be a concerted, co-ordinated effort to make sure that people are adequately provided for, or we will inevitably be faced with a pensions dark age."

Mr Folkard pointed out that there has also been a decline in the number of members of occupational pensions' schemes.

According to the research, while Personal Accounts might improve the situation, there was still a lot of uncertainty around their implementation and potential impact.

Mr Folkard said: "The erosion of the once sound company pensions' infrastructure in the UK, which supported the retirement needs of the working population for much of the 20th century, presents a future government with a massive challenge."

He said: "Axa is calling for more government messaging around the importance of pension saving. This should encourage individuals to take more personal responsibility in saving for an adequate level of retirement provision."

The news came as Axa launched a "Living on a State Pension" campaign on as part of its My Budget Day drive to encourage people to take better control of their finances.

Fourteen people including former England rugby captain Kyran Bracken, will live on the equivalent of the basic single state pension - £95.25 a week - and will record their experiences on www.axa.co.uk/mybudgetday.

Danny Cox, head of advice for Bristol-based IFA Hargreaves Lansdown, said: "You either have people who save or people who spend. The spenders will always spend and there needs to be a different form of compulsory element for them. Ultimately compulsion is the only answer."