Nearly one fifth sceptical over future of state pension

Nearly one fifth (18%) of people don’t believe that the state pension will exist when they retire, while a further 26% are unsure, research from Hargreaves Lansdown has revealed.

Furthermore, while more than half (57%) said that they thought the state pension would exist, the research found that the younger you are, the less likely you are to believe the state pension will still be around when you retire.

Indeed, according to the survey, only 38% of 18–34-year-olds believe the state pension will still exist at that point.

This compared to 42% of those aged 35-54, and a “whopping” 83% of over-55s who believe it will be around.

Commenting on the findings, Hargreaves Lansdown head of retirement analysis, Helen Morrissey, stated: “The state pension is the backbone of our retirement income, and yet the constant merry go round of change means almost one in five of us don’t think it will exist in the coming years.

“We are all living longer, and this has pushed up costs. Added to this the triple lock looks set to deliver an eye watering 8.5% increase in state pension next year.

“This is on top of the enormous 10.1% boost awarded back in April - great news for pensioners who have been struggling with the cost of living crisis but also an enormous financial headache for the Government.”

Morrissey acknowledged that there are levers Government can pull to try and contain the cost, such as tinkering with the triple lock, so increases are not so high.

“We saw this during the pandemic when furlough inflated wage data, prompting the Government to opt for the lower inflation figure instead," she continued.

“We may well see this happen again, given the contribution one off bonuses to the NHS and civil service have made to high wage data. If this is the case, it gives further evidence to the case to either change or scrap the triple lock.”

Alternatively, Morrissey suggested that the Government could look to increase state pensions age, noting that while the government recently opted against plans to accelerate the shift to 68, it will be revisited in future.

“The challenge is that if we raise the age too far not only will we see people forced to work longer than they are able to, but many people simply won’t live long enough to claim it," she continued.

However, Morrissey acknowledged that, given this potential for change “it’s no wonder” that there is a view, particularly among younger people, that the state pension is under threat.

“Given its importance as the foundation upon which we build the rest of our pension planning, we need to see real long-term thinking in this area with an overarching review to ensure it remains sustainable long-term and allows people to plan their retirement with confidence,” she added.

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