Will the state pension still exist when you retire?

Since the beginning of the 2024-25 tax year, pensioners saw an increase in the state pension that would see them receive an extra £900 per year.

Whilst this is great news for the current crop of retirees, what about upcoming generations? Will there be future challenges to keep up with the cost of living, and is there enough education about planning for future?

Concerns Among Younger Generations

Many young adults are concerned that they won’t receive any state pension at all in later life. In fact, research by Phoenix Group’s longevity think tank, Phoenix Insights, has found that half of under-50s don’t believe a state pension will exist by the time they retire. It’s understandable why this age group isn’t overly confident about what they’ll receive in the future, given the wider debate about the state pension that’s currently ongoing.

Financial Challenges of the State Pension

With people living longer, providing a state pension is becoming progressively expensive, especially when you factor in the government’s commitment to the triple lock. With the state pension age set to increase from 66 to 67 between 2026 and 2028, with this likely to be even higher before today’s younger adults even start thinking of retirement, it’s easy to see why under-50s aren’t hopeful.

But as Patrick Thomson, Head of Research and Policy at Phoenix Insights, puts it, the state pension is “An important intergenerational social contract”. As a result, any moves to scrap the state pension altogether would be hugely controversial, especially among this age group.

84% of adults of all ages said they believe that providing a state pension is an essential role of the government. In addition, 87% said they think the state pension is there to make sure every single person has a minimum level of income when they retire.

Knowledge Gaps About the State Pension

Thomson stated, “The state pension matters to all of us- 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.”

But while the level of support for the state pension was clear, the survey also highlighted some significant gaps in people’s knowledge. For example, more than a fifth of over-55s admitted they didn’t know their state pension age – and many of those polled said they didn’t know what the triple lock is. This is quite concerning, as many of these people will be hopeful that they’re in the last decade of their working lives and looking forward to enjoying a retirement without financial worries.

Realistic Expectations for Retirement

Another notable finding from the survey was that nearly one in five adults across all age groups believe they could live on the state pension alone in retirement. The full rate of the new state pension is £221.20 a week, which is clearly not enough to cover all living costs and leave enough left over to enjoy hobbies, interests and luxuries.

That’s why it’s crucial to have plans in place in addition to the state pension, such as workplace pensions, private pensions and other investments, and ensure that these make up the bulk of your income. You can then set yourself up for a much more comfortable lifestyle during your retirement and enjoy the kind of life that you want and deserve.

Here to Help

If you have any questions about saving for retirement and making the most of your pensions, our team of Wealth Experts can offer you their insights and specialist advice. Get in touch with one of our team to discuss further how we can help.