A recent report has disclosed the substantial reliance of numerous households on the state pension as their primary source of income during retirement. According to analysis by retirement specialist Just Group, over 1.2 million individuals, including 740,000 single retirees and 500,000 retired two-adult households, predominantly depend on the state pension.
The Office for National Statistics (ONS) categorizes households as primarily reliant on the state pension if at least three quarters of their total income comes from the state pension or similar pension-related state benefits.
Despite being a crucial support, the state pension falls short of providing a sufficient standard of living in retirement. The Retirement Living Standards recommend a yearly income of approximately £13,400 for a single pensioner to meet the “minimum” living standard.
The full new state pension amounts to £230.25 per week, resulting in a shortfall of £1,427 annually to attain the “minimum” retirement living standard. David Cooper, director at Just Group, emphasized the necessity for additional income sources to bridge the gap between current state pension levels and the minimum income standard proposed by Pension UK.
The state pension undergoes annual increases following the triple lock mechanism. This year, the state pension is set to rise by 4.8%, with the full new state pension increasing from £230.25 to £241.30 per week. Individuals retiring now typically require 35 years of National Insurance contributions to receive the full state pension entitlement.