Third of young adults believe state pension won’t exist when they retire

Adults in their twenties believe they will be unable to rely on a state pension in the future.

Published on

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.”



Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.



Petition calling for £25 Universal Credit uplift signed by tens of thousands

Petition argues that people on Universal Credit are being forced to choose between "paying bills and buying food."

MPs call on Chancellor to commit to raising benefits inline with inflation

The Work and Pensions Committee has written to Chancellor Kwasi Kwarteng.

SNP plan to cap rents for private and social tenancies

Emergency legislation introduced to the Scottish Parliament aims to protect tenants during the cost of living crisis.

DWP announce date for second cost of living payment

By November 23, millions of homes throughout the United Kingdom will get a £324...

What more evidence does the UK government need that families are in crisis?

It is "shocking and morally indefensible" that the UK government may not increase benefits inline with inflation, think tank argues.