New research from Prudential has revealed that 14 per cent of those planning to retire this year have made no personal pension provision and will be either totally or heavily dependent on the state pension.
The annual survey showed that 18 per cent of those planning to retire this year will have an income below the minimum income standard as defined by the Joseph Rowntree Foundation, which estimates that a single pensioner needs an income of at least £8,600 a year to reach a minimum socially acceptable standard of living.
The insurer tracked future plans and aspirations of people who plan to retire this year, finding that in the ‘class of 2014’ women are nearly three times more likely to rely on the state pension than men, with 20 per cent of women saying they have no pension savings compared with seven per cent of men.
Research Plus conducted an independent online survey for the insurance and pension provider between 21 November and 3 December 2013, among 7,821 UK non-retired adults aged 45 and above, including 1,010 intending to retire in 2014.
Vince Smith-Hughes, retirement income expert at Prudential, said: “The changes to pensions and how people can take their retirement income announced in the Budget last month will provide savers and retirees with more choices. However they don’t alter the fundamental fact that many people are not saving enough for a comfortable retirement.”
On average the state pension makes up 35 per cent of an individual’s total expected retirement income, which is the same proportion on average that is expected to come from company pension schemes.
Women are more reliant on the state pension than men, making up 42 per cent of women’s expected retirement incomes compared with 28 per cent for men.
Women also have less company pension scheme income than men, making up 27 per cent of women’s expected retirement incomes compared with 42 per cent for men.
Despite the widespread reliance on the state pension, there is confusion among those planning to retire this year about how much it is worth for an individual. Of those surveyed, 39 per cent either have no idea what the state pension is worth or think it is worth more than the £113.10 a week payable from April 2014.
Mr Smith-Hughes said: “It is important to avoid falling into the trap of overestimating the contribution that the State will make to your retirement income, as the State Pension alone is barely sufficient.”
The research also found that 17 per cent of those planning to retire this year will have debts outstanding, averaging £24,800 each. However, the average amount owed has fallen substantially for the second year in a row.
