Millions uncertain over pensions future
Published on 29 November 2012 12:01 AM
More than a quarter (28%) of people have no idea how much they will receive from their state pension, according to new research for Age UK.
Published today, the findings show a high level of uncertainty about retirement income, with a quarter (25%) of those surveyed unsure about how much private pension they are likely to receive, and a further third (31%) admitting that they don't have a private pension.
Plans for a simpler, fairer pension system expected
The new figures are revealed ahead of the publication of the government's long-awaited White Paper on state pension reform. The paper is expected to set out detailed plans for a simpler, fairer pension system which gives people a clearer idea about what the state will provide, making it easier to plan their retirement savings.
Age UK has long argued for a radical shake-up of the current system, which is extremely complicated and has resulted in 1.7 million of today's pensioners living in poverty and millions more destined to struggle through retirement on an inadequate income unless there is reform.
Most support idea of new single-tier, flat-rate pension
The charity's research shows a high level of public support for the proposed reforms, which should see the introduction of a new single-tier, flat-rate pension of around £140 per week for people reaching state pension age in the future.
Two thirds (62%) of people support the idea of a single-tier pension, with a high level of support in all age groups. In fact, although current pensioners are not included in the changes, many support the plans for reform.
Newly published qualitative research for Age UK found that older people's doubts over the fairness of the reforms were outweighed by the higher flat rate and simplicity of the new pension, with many feeling that it represented a ‘fairer deal' generally for older people.
Serious concerns over support for current pensioners
One older female research participant, on a lower income, commented: 'It's a good idea, I wish it had happened sooner… because I've been retired now 11 years and still only get £61 a week'. And a younger female pensioner, on a higher income, agreed: 'I can see how it needs to be reformed because it is so complicated, really complicated… I think it's going to be much better.'
However, Age UK remains deeply concerned over support for current pensioners - as do current pensioners themselves. The vast majority of older people consulted in focus groups for the charity felt that more support was needed for current pensioners, viewing the decision just to give the higher flat-rate pension to future pensioners as likely to create a more disparate older generation.
Women expected to benefit from proposed changes
Although the detail will be revealed in the White Paper, the reforms are expected to result in higher state pensions for low earners and those with caring responsibilities, and will particularly help women.
The government has said that reforms will be cost-neutral, which means that other groups, including some higher earners, will not be better off with a flat-rate pension. However these groups will still have the advantage of a simpler system, which along with the introduction of automatic enrolment, should make retirement planning easier.
Of those surveyed for the charity, only a quarter (26%) think that the state pension should be linked to people's earnings, while around half (47%) believe that it should provide a basic income to everyone who has contributed for much of their working life.
Current pensioners who won't benefit from reforms must not be forgotten
Age UK Charity Director General, Michelle Mitchell, said: 'Radical reform of our eye-wateringly complex pensions system is long overdue. With such high levels of uncertainty about our financial future, it's clear that a simpler system - which provides greater clarity for all and makes it easier for people to plan properly for retirement - is urgently needed.
'Overall we support the government's proposals for a single-tier, flat rate state pension, but as always the devil will be in the detail. The upcoming White Paper is expected to bring good news for many future pensioners, particularly those with lower lifetime earnings due to low pay or caring responsibilities.
'However we must not forget the millions of hard-up current pensioners who won't benefit from the reforms. It's no secret that many older people find means-testing difficult, yet the government has yet to get to grips with a benefits system that leaves the most vulnerable pensioners out of pocket by billions of pounds every year.
'Alongside its plans for future pensioners, the government must also develop a clear strategy and timetable for the reduction and abolition of current pensioner poverty.'