One in three working people fears that the state pension will expire within three decades

A third of the working population has no confidence that the state pension will still exist in 30 years, according to research.

The majority do not believe the state pension provides a decent income in retirement, although only 20 per cent knew roughly how much the full rate is currently: £203.85 a week, or about £10,600 a year.

Both the Tories and Labor have expressed their support for the state pension by promising the ‘triple lock’, meaning that the state pension should increase each year with inflation, average earnings growth, or 2.5 percent – whichever is higher.

But a poll of 3,000 people of working age, weighted to be nationally representative and conducted by Abrdn Financial Fairness Trust and the Institute for Fiscal Studies, finds pessimism about state pensions and retirement finances across the board.

11 percent thinks that the AOW will ‘certainly exist’ in 30 years’ time, 33 percent thinks not and 25 percent doubts.

The report says: ‘The fact that the state pension is so important to many people’s retirement income means that it would be incredibly difficult to achieve a good standard of living – without a huge increase in private savings – if the state pension or something similar didn’t have it. to exist.

‘In many ways, the AOW forms a ‘base’ for income after retirement, on which people can build up private pension rights. Confidence in the AOW is therefore important for people planning their retirement and retirement finances.’

The survey found that 41 percent expect a ‘poor’ income when they retire, 15 percent expect to retire at 70 and 13 percent say they will never retire. Nearly half expected that they would be less well off than their parents in old age.

Meanwhile, the vast majority could not correctly say to within about £20 how much a full state pension per week is worth, with 58 per cent stating they did not know and a significant proportion believing it to be less than the current amount.

Source: Abrdn Financial Fairness Trust and the Institute for Fiscal Studies

There was also gloom over future increases in state pensions, despite the commitment of the two main political parties to the triple lock and the 10.1 percent increase in line with inflation last April.

Some 11 percent of those surveyed think that the state pension will rise faster than inflation over the next ten years, compared to 38 percent who said it would rise more slowly.

“This could indicate that few understand the impact of the triple lock – or perhaps don’t expect it to last much longer,” says the Abdrn/IFS report.

But the report adds that there is much better understanding of the state pension age, which is currently 66 and will rise to 67 in 2028.

‘Significant figures suggest that they retire in their late 60s, around the time they are likely to reach state pension age. This shows the salience of the state pension age that is often highlighted in the media.’

The report found broad agreement that the state pension does not provide a reasonable standard of living, with 73 percent saying no and 14 percent saying yes.

And only one in five workers expect to be better off than their parents in retirement, and almost half expect to be less well off.

However, the report notes that while this view is also shared among 50-64 year olds, in the case of this demographic, on average, the parents are likely to have accumulated far less wealth than they do.

“Perhaps this is a sign that some of the pessimism may be exaggerated and that some will at least be in for a pleasant surprise when they reach state pension age and retire?” it asks.

With regard to fears that the state pension will no longer exist in 30 years, the report says this view is 40 percent higher than average among those who reported voting ‘leave’ in the 2016 EU referendum and those who voted conservative voted in 2019.

The Abrdn/IFS Report, One of a Pension Review Series on ways to improve financial security in retirement says: “Many are pessimistic about their potential standard of living in retirement.

‘This may be partly due to misconceptions about how well off they are compared to previous generations, due to not knowing – or underestimating – the state pension or a great pessimism about the future of the state pension.

‘Policy makers must therefore look for ways to simplify the system and increase confidence in what people can expect from it.’