Just 12 per cent of over-45s and around 13 per cent of 66-77 year-olds said they would be able to survive on the new flat-rate state pension, which equates to just under £8,000 a year, new research has revealed.
The full level of a flat rate state pension will be set above the basic means test, currently at £148.35. When it was first proposed by the Department for Work and Pensions, the weekly pension was set to be £140 per week, but in May the government confirmed the full level will be higher.
Just over 12 per cent of over-45s said they could survive on this, but 70 per cent admitted they would struggle to survive. The research was undertaken on over 2,000 people over the age of 45 by Opinionmatters on behalf of insurer Partnership.
Around 38 per cent said the struggle would be due to ‘basics’ costing more, while 32 per cent suggested that they would look for part-time work to increase their income if they were expected to survive on the state pension.
Others would cut back on everything but the essentials (32 per cent) and look to downsize their property (15 per cent). In addition, 12 per cent would look for suggestions on how to manage their money, with 3 per cent looking to their family and friends for support.
Andrew Megson, managing director of retirement at Partnership, said that with the cost of living increasing and people struggling to reach common financial milestones such as purchasing a property, it is easy to understand how some reach retirement with little in the way of pension savings.
“This should improve with the advent of automatic enrolment, but people do need to consider carefully just how much income they need to enjoy their retirement.
“Regularly putting money into a pension and ensuring that you have made sufficient contributions to be eligible for the full state pension are just two of the things that people can do to ensure that they never have to make the choice between heating and eating in retirement,” he added.
donia.o’loughlin@ft.com
