New research found some 27 per cent of people are totally reliant on income from the State Pension alone.
New research conducted by Opinium on behalf of Hargreaves Lansdown shows that more than one in four people are heavily reliant on their State Pension in retirement. Some 27 per cent of people said they were either totally or heavily reliant on the State Pension with a further 35 per cent saying they would be quite reliant on it.
Chancellor Rachel Reeves confirmed during the Autumn Budget last week that the New and Basic State Pension will rise by 4.8 per cent from April 6, while additional elements such as deferred State Pension rates will increase by 3.8 per cent.
The increase will see those on the full New State Pension receive £241.30 per week, while those on the maximum Basic State Pension would receive £184.90 per week.
However, Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, says there are simple ways pensioners can boost their retirement income – whether they have reached State Pension age or not.
Ms Morrissey explained: “The State Pension forms the backbone of our retirement income. A full New State Pension is currently worth £11,973 per year and so makes up a good chunk of most people’s retirement income. There’s always going to be some level of reliance on it – some 35 per cent said they would be quite reliant on their State Pension. However, well over a quarter of people admit they will be totally or heavily reliant on it. A further 16 per cent were unsure.
“The issue of total reliance on State Pension will lessen over time as more people go through their working lives auto-enrolled into a workplace pension scheme. This will enable them to build up a decent retirement income over and above what they get from the state. This means we should see the proportion of people who say they won’t be reliant on State Pension grow from its current 21 per cent over the coming years.
“It may also be the case that people assume they will be heavily reliant on the State Pension because they aren’t sure how much they are on track to receive from their own pensions.”
The retirement expert continued: “You can save into a pension for years and not be aware of how much income that pot could generate for you. This is particularly the case when you have several different pensions scattered around from different employers. “Taking the time to check in can give you a nice surprise of knowing you have more than you thought or at least allow you to get a plan in place if you aren’t on track.”
Ms Morrissey explained that it is “really important to take the time to think about what you want your retirement to look like” adding that from there you can start to get a picture of how much it is likely to cost, and you don’t run the risk of getting close to retirement and realising that you won’t be close to being able to maintain the standard of living you enjoyed while working.
She also said there are online tools such as pension calculators to get a sense of how much you are currently on track for, and you can then start to make a plan to fill in any gaps.
Ms Morrissey said: “Taking small steps such as boosting contributions every time you get a pay rise or new job is one way to bolster your position. It’s also important to make sure you are making the most of your employer contribution as some will increase their contribution if you hike yours.
“Another way to boost your retirement resilience is to check for pensions you may have lost track of over the years – even the smallest of pensions grow over time and you could unearth a pension worth several thousand pounds. If you think you’ve lost track of a pension then contact the government’s Pension Tracing Service. All you need is either the name of your employer or the pension provider and the service can help you track down contact details. It could be a quick way to transform your retirement.
“Once you’ve tracked down those lost pensions you may decide to consolidate them all in one place. This can save you time, money and admin. Having one overarching view of your pensions can transform your retirement decision making as you will approach decisions around a large pot differently to a series of small ones.
“For instance, you may be tempted to cash in small pensions. However, before you take steps to consolidate it’s important to check that you aren’t incurring any exit fees. You also need to beware of giving up valuable benefits such as guaranteed annuity rates that can boost your income.”