The state pension is the biggest single part of the social security system in the UK, however, new research indicates a lack of understanding of the benefit amongst Britons.
Phoenix Group’s Patrick Thomson, head of research and policy at Phoenix Insights, said: “The state pension matters to all of us, it is an important intergeneration social contract helping to reduce poverty among retirees, paid for from contributions of the working-age population.
“It is the biggest single part of the social security system and has been the foundation for many people’s retirement income for over 75 years.”
However, Mr Thompson noted that Phoenix Insights’ research exploring public attitudes towards the state pension found that understanding of the system is “very low”.
Areas less understood include the ‘triple lock’ and when people can access their state pension.
Additionally, Mr Thompson said: “A common misconception among the public was that National Insurance contributions are kept in a personal pot and accessed at state pension age, rather than the state pension being paid for out of general taxation.”
By honouring the triple lock, the highest percentage out of inflation, wage increases, and 2.5 percent is used to determine how much the state pension will increase.
Wages increased the most of the three values, meaning state pension rates will rise by 8.5 percent on April 8, 2024.
Currently, the state pension can be accessed when a person reaches the state pension age. For people born before April 5, 1960, their state pension age is 66.
Anyone born after this date will be able to access their state pension when they reach 67, as the age is due to rise by 2028, and will eventually increase to 68.
Additionally, Phoenix Insights’s research also found some more revealing stats about retirement expectations.
- Half of adults expect to work up to at least their state pension age (51 percent)
- Just 18 percent of adults say they could live on the state pension alone in retirement
- Over one in five (22 percent) over 55s don’t know their state pension age
- 87 percent of adults believe the state pension is there to ensure everyone has a minimum level of income in retirement
- The majority of adults (84 percent) believe that it is an essential role of Government to provide the state pension
- Half of those under 50 think there probably won’t be a state pension by the time they retire.
Phoenix Group polled 2,000 adults in the UK with Opinium in January 2024.
Mr Thompson continued: “As an increasing proportion of the population reaches state pension age in the coming decades, it is important that the system is trusted, sustainable, understandable and supports the financial security of retirees.”
When thinking about the costs of the triple lock and the state pension more broadly, Mr Thompson noted: “The Government needs to consider two important factors: how much people are paid through the state pension and at what age they will receive it.
“Any changes to either of these factors have a huge impact on individuals planning for their retirement and our public finances.
“We know that simply raising the state pension age doesn’t mean that people will be able to work for longer. We need proper support to help make work better for more people, and to support those unable to work to higher ages.”
