Bulk of post-retirement income comes from state pension 

Despite the efforts of the current and previous governments to promote the adoption of private pensions, the state pension still makes up the bulk of post-retirement income.

Financial planning December 17, 2018 by Tom Bailey

Despite the efforts of the current and previous governments to promote the adoption of private pensions, the state pension still makes up the bulk of post-retirement income.

According to data released by Just Group, the state pension provides those 65 and over with nearly £6 out of £10 of income. That figure rises to £9 out of £10 for those in lower income groups. In total, nearly 75% of those 65 and over derive over half their income from the state pension.

Only those with an annual retirement income over £20,000 have a higher proportion of their income from a private pension scheme than the official state pension.

Commenting on the data, Stephen Lowe, group communications director at Just Group, says: “The significance of state pension age on most people’s lives should not be underestimated – for many it marks the point where people can finally afford to step back from work and it provides the financial bedrock for later life.”

The data comes at a time when the state pension age is on the rise.

The state pension age for women has now risen to 65, the same age it is for men, this month. The age is scheduled (for both genders) to rise to 66 by 2026 and 67 by 2028.

The data appears to confirm a point made by critics of raising the State Pension age for women in line with the age for men. The research shows that women over the age of 65 were shown to derive a higher amount of their income from the state pension (68%) than men of the same age (44%).

According to Lowe, the findings of the research show that the rise in the state pension age is likely to “have a major effect on the labour market”.

He notes: “We can expect to see the growth in the number of older workers make up a large part of the rise in overall employment for the next decade.”

Where does the income of people aged 65 or older come from?

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