The government’s latest review of the state pension age (SPA) begins today against a backdrop of fresh research showing how heavily many older people rely on the state pension for their income, and how widely it is regarded as an entitlement.
Retirement specialist Just Group found that 94 percent of adults at SPA in the UK see the state pension as an entitlement, with only 4 percent viewing it as a benefit. More than half (58 percent) of people aged over 66 believe it is affordable for the country over the long term, though 18 percent disagree and a quarter (24 percent) are unsure.
The research revealed the degree of reliance on state pension payments: one in seven (13 percent) over 66s said it accounted for over 90 percent of their monthly household income, while 44 percent reported that it made up more than half.
The research also looked at views on the fairness of the triple lock, which guarantee that the value of the state pension will rise each year by whichever is highest out of three measures: average earnings growth, the rate of inflation, or 2.5 percent.
The policy was introduced in 2010 and is designed to protect pensioners’ incomes against both rising living costs and wages.
Nearly two thirds (64 percent) of over 66s said the triple lock was fair to older generations, but only 16 percent believed it was fair to younger generations.
Stephen Lowe, group communications director at Just Group, said: “As a result of rising longevity and dropping birth-rates, it is estimated that a quarter of the UK’s population will be aged 65 or older by 2050. This means that the burden of funding the state pension will fall on a shrinking proportion of working people.
“If the government wants to avoid increasing taxes or means-testing the state pension then it may have to look at options either to increase the age at which people receive the state pension or to moderate the amount paid.”
Lowe warned that any change would hit hard, as “more than four in ten of current recipients tell us it accounts for the majority of their income and there is a significant proportion wholly reliant on it.” He said that 62 percent retire before they reach SPA, often due to redundancy or ill health, which could leave people with a wider financial gap if payments are delayed.
He urged individuals not yet receiving the state pension to build private pensions and savings to supplement it, pointing to Pension Wise and MoneyHelper as free resources.
The SPA review is taking evidence through an independent report process.
