Almost two-thirds (63%) of those aged 18-34 say they don’t know when they’ll receive their state pension, while over half (54%) of 35-49-year-olds admit they are in the dark. More worryingly, 28% of people aged 50-64 admit they don’t know their state pension age. Furthermore, almost a quarter (23%) of 18-34-year-olds who say they know their state pension age wrongly believe it is 65 – three years sooner than the current legislative timetable. Approaching three-quarters (72%) of all UK adults expect their state pension age to rise, pointing to the uncertainty that exists over a central pillar of people’s retirement income plans.
Results point to a ‘ticking timebomb’, with savers either needing to boost their contributions or delay their planned retirement to cover the income gap. Government should urgently consider reviewing existing state pension age communications in light of the findings to forestall a repeat of the WASPI issue. Anyone who isn’t sure of their state pension age can use this tool to find out: Check your State Pension age
Tom Selby, director of public policy at AJ Bell, comments: “Millions of Brits risk sleepwalking into a retirement shock, with almost half of all adults under state pension age admitting they don’t know when they’ll receive their state pension. This likely in part reflects a lack of engagement with pensions, particularly among young people, and in part the lack of certainty that exists around state pension policy.
“There is also evidence that a sizeable proportion of people who think they know their state pension age have not taken into account planned state pension age hikes. For example, almost a quarter of 18-34-year-olds who said they know their state pension age think it is 65, with just 11% correctly stating that it is 68. If these people base their retirement saving plans on this misunderstanding, they will be left with a black hole of almost £35,000** in their pension plans when they reach age 65.
“Perhaps more worrying is the fact that a significant proportion of those aged 50-64 are also unsure of when they will receive their state pension.
“Brits can be forgiven for being in the dark because state pension ages have been changing regularly in recent years. In particular, the women’s state pension age increased from 60 to 65 between 2010 and 2018, before state pension ages of both men and women rose to age 66 by 2020. Further increases are scheduled to age 67 between 2026 and 2028, and age 68 between 2044 and 2046.
“There is also the spectre of further increases in the state pension age to balance the books, with some calling for the state pension age to rise to age 70 or even higher in the coming years. Given this backdrop, it is not surprising almost three-quarters of people expect their state pension age to increase before they have reached it. Add to this the lack of clarity over exactly what the state pension is going to be worth and the triple-lock, and the foundation upon which people’s retirement plans are built feels anything but stable.”
The need for policy stability and ramped-up state pensions communications
“The message to politicians is clear – millions of people simply have no idea when they will receive the state pension. With future increases in the state pension age inevitable, there is a danger the WASPI issue, which centred on poor communication of changes to the state pension age, will be repeated. State pension communication efforts need to be reviewed and ramped up to ensure understanding is improved.
“In addition, the next government must put stability and predictability at the heart of state pension policy. To plan for retirement over decades, people need to have at least a decent idea of what they can expect to receive from the state and when they will receive it.
“The triple-lock, and more recently Rishi Sunak’s proposed quadruple-lock, do not provide that certainty. They merely allow politicians to avoid addressing the vital question of what a fair value for the state pension would be and how long people should, on average, be in receipt of it.
“Given the grip the triple-lock has on state pension policy at the moment, an independent review will likely be needed if we are to get anything resembling the cross-party settlement required to deliver long-term stability.”
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