Average retiree relies on £17.5k a year from state

Average retiree relies on £17.5k a year from state

Average British retirees receive the equivalent of £17,500 a year in state pension payments, other monetary benefits, and benefits in kind, research by Prudential has revealed.

Using data from the Office of National Statistics, Prudential found retired households received a total of £11,227 a year from the state in cash benefits, including £8,954 from the state pension and £2,273 in additional benefits.

The report also found in-kind benefits such as healthcare and travel subsidies were worth £6,274 a year.

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Without the state benefits, 51 per cent of pensioners would have to make “significant alterations to their lifestyles”, the report found.

More than a third of pensioners said they would not be able to afford dental treatment or have eye tests without state subsidies; 30 per cent said public transport would be unaffordable without pensioner concessions; and 23 per cent said that days out were only possible with pensioner discounts.

Nine per cent of pensioners said they would not be able to afford a TV licence. Currently the TV licence is free for the over-75s.

Under the new flat rate state pension, in place from 6 April 2016, retirees need 10 qualifying years of national insurance contributions to receive the full amount of £155.65 per week.

Pensioners retiring before that date needed 30 qualifying years of national insurance contributions or credits - for example for unemployment, sickness or as a parent or carer, or were paying voluntary national insurance contributions - to get the full basic state pension of £119.30.

Vince Smith-Hughes, retirement income expert at Prudential, said it was “understandable” that so many pensioners relied on concessions and discounts to maintain their quality of life.

However, he said this reliance put pensioners in a vulnerable position, as these benefits were at the discretion of the state.

He said: “With the average retirement now lasting 20 years, the debate on the affordability of universal support for the retired will continue, and pensioners may find the supplements to their income being cut in the future.

“For most people looking to be able to maintain their quality of life in retirement, the best approach is to save as much as possible as early as possible during their working life.

“And when the time comes to make big decisions about retirement saving and taking an income from a pension, most should benefit from a consultation with a professional financial adviser or seeking free guidance from the Pension Advisory Service or Age UK.”

Alan Solomons, a director of Alpha Investments and Financial Planning, said he doubted whether the state pension would even be there in decades to come, because the government would simply not be able to afford it.

He said the best solution to this problem would be to make auto-enrolment compulsory.