Bleak future as retired rely on a state pension
BRITONS are still relying on the state pension for most of their retirement income, which means that they are increasingly feeling the squeeze, as the age at which it is paid starts to climb.
The days of claiming the state pension on your 65th birthday are done as the retirement age climbs to 66 between now and October 2019, and then to 67 from 2026.
Women, carers, those with health problems or in manual jobs run the risk of poverty as many will struggle to carry on working until the higher age.
Far too many are unaware of the challenge as one in four aged between 50 and 64 have no idea when their state pension kicks in, according to Age UK.
Campaigners have renewed calls for the state pension to be made more flexible, so people can claim earlier in cases of hardship.
STATE PROVIDES
Nearly £6 in every £10 of income received by the over-65s comes from the state, rising to £9 for those on low incomes.
Three-quarters of all retired people receive more than half their income this way even though the new flat-rate basic state pension is just £8,546 a year.
That is despite years of Government incentives to save in company and personal pensions, and other tax-free schemes such as ISAs. Women are particularly reliant on the state pension which makes up 68 per cent of their retirement income, against 44 per cent for men, according to new research from retirement adviser Just Group.
Men generate 26 per cent of their retirement income from defined benefit or final salary workplace pension schemes, but this falls to just 12 per cent for women.”
Stephen Lowe, group communications director at Just Group, said the state pension remains the “financial bedrock” for millions: “The rise in the state pension age will mean growing numbers have to carry on working into later life.”
WOMEN SUFFER
Many women born in the 1950s have been caught out by the increase in the state pension age for them from 60 in 2010, although last month they won the right to a judicial review of the Government policy.
Maike Currie, investment director at Fidelity International, said women are also frequently left out of the workplace autoenrolment scheme because they earn less than £10,000 a year from their main job: “After having children, many women work part time or take on flexible work from several employers.”
Currie said workers need 35 years of National Insurance contributions to get the full basic state pension, while those with less than 10 get none at all: “The ability to inherit your spouse’s pension used to be a key benefit for women who have not built up a decent pot, but this disappears under the new system.”
WORKING ON
Age UK charity director Caroline Abrahams said huge numbers of men and women in their 50s and 60s are unable to carry on working and struggle as a result: “Lifelong manual workers crippled by arthritis and carers who have given up work to look after an ailing partner or parent face the prospect of being totally broke as they wait to claim their state pension.”
Abrahams said the Government needs to give more support to men and women earning low wages who are completely or mainly reliant on the state pension to get by in retirement.
She called on the Government to allow early access to the state pension for those who have no choice but to stop working early, which was echoed by Ian Browne, pension expert at Quilter: “Hundreds of thousands of people struggle financially because they are unable to carry on working but are years away from accessing their pension.”
He called for greater flexibility, with everyone given the option to receive a reduced state pension early or an increased one later: “It is more important than ever to build up your own personal savings to help fund care if you fall ill before you can access the state pension.”