Can you rely on the state pension to fund your retirement?

Published by Guy Hilton on 27 November 2020

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The age at which the state pension will become payable for those who qualify increased to age 66 from October 2020.

Figures from the Department of Work & Pensions from August 2019 indicated that there are now 12.6 million people receiving a form of the state pension.

This rise in state pension age partly reflects the increase in life expectancy in the UK amongst the population.

When it was first introduced in 1908 and was paid from the age of 70, when life expectancy was 40 for men and 43 for women, those who were eligible to claim it only did so for nine years. Fast forward that to 2017, where 85% of the population who were reaching the state pension age were claiming it, on average, for 24 years.

What are the changes?

The state pension is paid to those who have at least 10 full years’ worth of national insurance contributions throughout their working lifetime with the maximum amount, now increasing to £175.20 per week, paid to those who have 35 full years of contributions.

If you were born between 6th October 1954, and 5th April 1960, this is going to directly affect you as you will now be eligible to receive your state pension from your 66th birthday.

How do I know how much my state pension will be?

For anyone who wishes to retire or is approaching state pension age it is imperative that you get a state pension forecast. This will enable you to see how much your state pension will be and when you will start receiving it in order that you can plan ahead. If you do not have enough qualifying years you will also have the option to ‘top-up’ your state pension entitlement; you can check your position at

What we may expect in the future?

There are further plans to increase the state pension age. Under current plans the state pension age will increase to age 67 between 2026 to 2028, affecting those born after April 1960, and eventually 68 between 2044 to 2046, affecting those born after April 1977, although this may be brought forward to between 2037 and 2039.

It can be assumed that unless life expectancy reduces, anyone who is under the age of 35 now, will most likely not receive the state pension before the age of 70.

This is particularly concerning as we published in our ‘Planning for your future: Financial clarity in an uncertain world’ report 33% of individuals aged between 35-59 and 64% of those aged over 60 plan to rely on the state pension to fund their retirement.

What should I be doing now?

The key message is for those who are just starting their careers or those at the end of theirs is to have a plan, as how long you work for or how long you decide to retire before you receive the state pension is a vital issue for long-term financial planning.

As life expectancy continues to increase, it is clear from current plans that the state pension age will also likely increase. This means that workers, many of them younger, may have to work for longer or choose to retire before the state pension age and be dependent on their own savings to live on.

Therefore it is important that any private or occupational based pensions and savings that you may have are reviewed so that they ‘work harder’ for you and reflect how you intend to draw on them in retirement.

Ask yourself whether the funds you have built up so far are at a level whereby you can have the standard of living that you desire in retirement and if not, take responsibility and action on this as early as possible.

To discuss planning for your future contact our Financial Planning team on +44 (0)1227 768231 or provide your details on our online enquiry form.

The content of this article is for information only and does not constitute formal financial advice. This material is for general information only and does not constitute investment, tax, legal or other forms of advice.

You should not rely on this information to make, or refrain from making any decisions. Always obtain independent, professional advice for your own particular situation.


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