Young people are increasingly losing confidence in receiving a state pension when they are older, with many not thinking it will exist at all, new research reveals.
According to financial provider Canada Life UK, one in seven (14%) people think the state pension won’t exist by the time they retire – going up to one in five (20%) of 18 to 24-year-olds.
Despite recent governments being wary of being seen as giving pensioners a poor deal, people think this is likely to change.
The research found that 25% of people aged 18 to 55 think the state pension age will be 70 by the time they are eligible to claim it.
Just under one in three people (32%) think it will still exist but will only provide negligible income, while just over one in five (21%) think it will be means tested. Just under a quarter (24%) think it will still exist largely unchanged.
The research comes just as the state pension age for men and women has been equalised to age 65.
The state pension age for men and women will gradually increase from 65 to 66 from now until 6 October 2020. It is then due to increase to 67 by 2028 and 68 by 2039.
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Under projections drawn up by the Government Actuary’s Department, younger workers could face working until the age of 70 to qualify for a state pension.
Andrew Tully, technical director at Canada Life UK, says: “While people broadly think the state pension will still exist in some form when they retire, it’s striking how many people, especially younger generations, have little confidence it will be there at all by the time they retire.
“Some might say it is unrealistic to expect state pension provision to remain static given we are living longer and working longer. Our research suggests people are being pretty pragmatic and are not banking on the state pension to support them in retirement.”
Young people also do not think the state will provide much for them either.
The research found that on average 18 to 24-year-olds expect the state pension will make up around 27% of their retirement income, compared with an average of 42% among other age groups.
Despite the 'triple lock' guaranteeing state pension increases, one in three UK adults who are not yet retired expect to receive a state pension of £150 per week – below the current full pension of £164 a week.
When it comes to how fair the current system is, 53% think the state pension isn’t fair given how much they have paid in tax and National Insurance contributions, while nearly two-thirds of people (65%) think they will put in more than they get out.
Andrew Tully, says: “People appear to be ‘pricing in’ low expectations of the state pension that will be waiting for them when they retire, most likely because they see successive governments continually moving the goal posts, often with good reason.
“The success of auto-enrolment will hopefully begin to bridge the retirement savings gap, as people take control and appear to be moving away from a reliance on state provision. After all, private pension savings are one of the best protections against whatever decisions future governments may take on state provision.”