New research has laid bare the extent to which Britons depend on the State Pension to fund their later years, with over a quarter admitting to heavy reliance on the government payment.
Significant Reliance on State Support
A study conducted by Opinium for the investment platform Hargreaves Lansdown found that 27 per cent of UK adults surveyed stated they were either entirely or significantly reliant on the State Pension for their retirement income. This figure highlights a substantial dependency on the state-funded safety net for a large segment of the population.
An additional 35 per cent of respondents said they would be somewhat dependent on the State Pension, meaning a total of 62 per cent anticipate some level of reliance. In contrast, just 21 per cent said they would not be reliant on it, while 16 per cent were unsure about their future financial position.
The Backbone of Retirement Planning
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, commented on the findings, stating: "The State Pension forms the backbone of our retirement income." She noted that the full New State Pension, currently worth £11,973 per year, constitutes a major portion of income for most retirees.
"There's always going to be some level of reliance on it," Morrissey added. "However, well over a quarter of people admit they will be totally or heavily reliant on it."
Future Outlook and Auto-Enrolment Impact
The analysis suggests that the issue of total reliance on the State Pension is likely to diminish in the coming years. This positive trend is attributed to the widespread adoption of auto-enrolment into workplace pension schemes, which has become standard for employees throughout their working lives.
"This will enable them to build up a decent retirement income over and above what they get from the state," Morrissey explained. "This means we should see the proportion of people who say they won't be reliant on State Pension grow from its current 21 per cent over the coming years."
Experts also point to a potential knowledge gap influencing people's perceptions. Many may assume heavy reliance on the State Pension because they are uncertain about the value of their own accumulated pension pots, especially if they have multiple pensions from different former employers.
"Taking the time to check in can give you a nice surprise of knowing you have more than you thought or at least allow you to get a plan in place if you aren't on track," Morrissey advised, emphasising the importance of regular pension reviews.
