- Nearly one in five (17%) pensioner units surviving off state benefits alone, highest level since 1995/96
- Benefits make up more than 40p in every pound for UK pensioners and continue to be the main component of retirement income
- Improved financial education and continued sector innovation the key to growing private sources of income, says Equiniti
The State Pension continues to be the central component of retirement income for pensioners in the UK as the proportion of those solely reliant on Benefits rose to its highest level since the mid-1990s.
Analysis of ONS statistics from Equiniti1, one of the UK’s leading pension administrators, shows that in 2017/18 17% of pensioner units had no income to supplement that provided by the State, an increase from 14% the previous year. Single pensioners are the most dependent on the State with a quarter having no additional income to state benefits, the highest proportion ever recorded.
Chris Connelly, Propositions & Solutions Director at Equiniti’s pension business, believes improving awareness of retirement savings is the key to increasing the amount of independent income available to those entering retirement.
“These figures underline how important it is that people continue to learn about the importance of a later life income. It is worrying that one in five UK pensioners seems to be entering retirement with no personal savings or investments leaving them to rely solely on the income the State is able to provide.
“Auto-enrolment has gone a long way to improving behavioural trends in pension saving, however for the cohort closest to retirement it remains a concern that they will not have any funds of their own.”
The statistics also show the consistent increase in state benefits over the past decade with payments now totalling £229 a week (c.£11,900 a year) on average, the same as the previous year, accounting for more than two-fifths (43%) of pensioner income.
Occupational pension income saw a slight downtick falling from £160 to £148 a week, however it still accounts for over a quarter (28%) of pensioner income. Earnings income is the third highest component increasing to £92 a week and 17% of total income.
Connelly also said that innovations such as the Pensions Dashboard will be crucial in connecting people with their later life savings, and highlighted the importance of improved financial education.
“In the short term, the introduction of the Dashboard may help some recent retirees discover other benefits they may have lost touch with. It is important we make sure they receive everything they are entitled to. For later generations coming through, Dashboards will also help them understand the likely income they may receive in retirement and give them time to do something about improving it.
“Improving financial education will be the long-term answer to this solution in ensuring those starting out in their careers consider putting money away for later life as the norm. Otherwise state benefits, for however long they last, will continue to provide a significant chunk of retirees’ income and continue to be one of the biggest challenges for the public purse.”
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Notes to Editor:
- Pensioners’ income series: financial year 2017 to 18: https://www.gov.uk/government/statistics/pensioners-incomes-series-financial-year-2017-to-2018
Equiniti Group plc, an international technology-led services and payments specialist, provides non-discretionary payment and administration services to some of the world’s best-known brands and UK’s largest public-sector organisations.
It is the UK’s leading provider of share registration, employee share plans, and associated investor services, and also has market leading positions in pension administration and software, and employee benefit schemes.
Equiniti’s EQPaymaster division is one of the largest providers of outsourced pension administration in the UK, working with schemes in the public and private sectors with complex defined benefit, defined contribution and hybrid arrangements. In addition, Equiniti also provides specialist pensions savings and retirement income administration services to the insurance sector.
The wide array of administration services provided include; member record keeping and maintenance; web; treasury; accounts; communications; and pensioner payroll. Equiniti supports around nine million pension scheme members and pays around 20% of UK pensioners, delivering £25 billion in payments to 3.5 million pensioners and annuitants in 2017.