Posted on: 25th February 2019
Young people are losing confidence in whether they will receive a statewhen they are older. According to research, many believe that it will cease to exist by the time they retire. According to financial provider Canada Life UK, 1 in 7 (14 per cent) of people believe that the state pension will be gone by the time they retire – going up to 1 in 5 (20 per cent) of those between the ages of 18 and 24.
Doubts in the state pension
Despite recent governments being concerned about being viewed as offering a poor deal to pensioners, people think this will soon change. According to the research, a quarter of those aged 18 to 55 believe that the age for the state pension will go up significantly and that they will be 70 years old before they are eligible to claim it.
Just under 1 in 3 people (32 per cent) believe that it will still exist but will only cover negligible income. What’s more, 21 per cent believe that it will be means tested. Just under a quarter (24 per cent) believe it will still exist largely unchanged.
State pension age increase
This research comes just as the state pension age for men and women has been equalised to 65. This age is set to gradually increase to 66 between now and 6th October 2020. After this, it is due to increase to 67 by 2028 and 68 by 2039. Under projections that were drawn up by the Government Actuary’s Department, younger workers could expect to be working until they turn 70 to qualify for a state pension.
The concerns of young workers
Andrew Tully, technical director at Canada Life UK, says: “While people broadly think the state pension will still exist in some form when they retire, it’s striking how many people, especially younger generations, have little confidence it will be there at all by the time they retire.
“Some might say it is unrealistic to expect state pension provision to remain static given we are living longer and working longer. Our research suggests people are being pretty pragmatic and are not banking on the state pension to support them in.”
Young workers also believe that the state pension will offer little provisions for them. The research found that, on average, those between the ages of 18 and 24 expect the pension to make up around 27 per cent of their retirement income. Other age groups, however, averaged the state pension to make around 42 per cent.
Despite the ‘triple lock’ that guarantees an increase in the state pension, a third of UK adults who are yet to retire expect to receive a state pension of £150 per week. This is less than the current full pension of £164 per week.
Giving more to receive less
When it comes to the fairness of the current system, just over half (53 per cent) believe the state pension to be unfair given how they have paid in tax and National Insurance contributions. Almost 2 out of 3 people (65 per cent) think they put more in than they get out.
Andrew Tully, says, “People appear to be ‘pricing in’ low expectations of the state pension that will be waiting for them when they retire, most likely because they see successive governments continually moving the goal posts, often with good reason.
“The success of auto-enrolment will hopefully begin to bridge the retirement savings gap, as people take control and appear to be moving away from a reliance on state provision. After all, private pension savings are one of the best protections against whatever decisions future governments may take on state provision.”
Be ready for the future with
It can be worrying to think about the future when looking at these statistics, but it doesn’t have to be. By having an independent financial advisor by your side, you can relax knowing your pension savings are being cared for wisely, enabling you to enjoy your retirement. If you would like to speak to an expert, then look no further than Haven IFA. Get in touch to speak to one of our advisors today.