According to a study conducted by the mutual life and pensions provider Royal London, young adults in their twenties believe they will be unable to rely on a state pension in the future.
More over half (56%) believe they will have to wait until they are over 70 years old to qualify. With a projected state pension age of 68 for individuals in their twenties, this would put them at least two years behind.
Clearly, retirement is a long way off for younger workers, but many are sceptical about how much, if any, of their retirement income would come from the state pension.
Close to one-third (30%) predict that the state pension will no longer exist by the time they retire, while half (50%) anticipate that it would be less generous.
The amount of a person’s state pension is determined by their national insurance record, however three-quarters (74%) of those surveyed were unaware that 35 years of national insurance contributions or credits are currently required to obtain the full state pension.
For the majority of individuals, the state pension will serve as the basis for their retirement planning. However, people who rely only on the state pension should be warned that at the current level of approximately £9,600 per year, it will only cover fundamental expenses.
It also falls short of the’minimum level’ of retirement income for an individual, which is £10,900 per year according to the Pensions and Lifetime Savings Association’s retirement living standards, which classifies an annual income of £20,800 per year as essential for a’moderate’ lifestyle.
Increasing lifespan does create the assumption that the goalposts will continue to change, leaving young adults with the possibility of receiving fewer retirement benefits. Nearly four in ten (37%) believe that qualifying requirements will alter by the time they retire.
Clare Moffat, pensions expert at Royal London, said: “For workers in their twenties, retirement is likely to be one of the last things on their mind with more pressing financial priorities like the cost-of-living crisis and paying bills, saving for a house or even a car, occupying their thoughts.
“But concerns about when and how much state pension will be available might lead to an expectation that they’ll need to self-fund a greater portion of their retirement.
“Future financial security is likely to mean working for longer than previous generations and also saving more.
“The good news is that there’s a long-time horizon in which to not only develop positive savings habits but benefit from growth through compound interest.”