Pensions “Less Generous” In the Future

According to financial analysts, state pension may become less generous in the future with retirement age bumped up and mean-testing reintroduced. This would mean plenty of pensioners left out of their actual pensions.

The survey, carried out by investment company Aegon UK and retail managing director Duncan Jarrett, indicates that it could lead to retirement uncertainty for plenty of retirees in the future.

“The state pension is a financial lifeline for millions of pensioners in the UK, so it’s concerning to see such a resounding number of financial advisers foresee more uncertainty on the horizon.

“People need confidence in what to expect to receive from the state, so we can’t afford cliff-edge moves to means testing, or sudden increases to the state pension age.”

Anybody who would buy a private pension equal to the new £151.25 weekly flat rate state pension at retirement will cost £273,000 as a one-time payment. The amount is almost triple the £63,815 one-time payment introduced by those nearing retirement for their private pensions.

Jarrett added:

“It highlights just how fundamental the state pension is to people’s retirement plans. If an individual wanted £303 a week in retirement, they would need an equivalent private pot of £273,000 on top of their state pension.”

Financial Expert Yvonne Goodwin warned “I can’t see any current system remaining in place for longer than 10 years. The Government has always said that pensions will be a flat rate for everyone, but that’s just not going to happen. And that will be a big shock for many people. People are living longer and that’s a strain financially.

“Things will change and people have to really take charge of their own retirement and start to save as soon as you start work, if you can afford to save.”