State pension reforms destined not to last say advisers

Just one in 25 advisers believe the state pension will exist in its current form in 30 years time, with half expecting retirement age to be increased further and 41 per cent expecting it to be less generous.

Research carried out amongst advisers by Aegon UK has found that 39 per cent believe the state pension will revert back to means testing.

Of the 96 per cent of financial advisers that think the state pension will change from its proposed form, 49 per cent believe the government will make further increases to the state pension age beyond those currently planned.

The new single tier state pension of £151.25 per week would cost a man £280,000 to buy it at age 65, and £273,000 for a woman at 63. It is the only form of retirement income for at least 1.2million pensioners, and for the majority it is a major part of their overall retirement income.

Aegon UK managing director, retail Duncan Jarrett says: “The state pension is a financial lifeline for millions of pensioners in the UK, so it’s concerning to see such a resounding number of financial advisers foresee more uncertainty on the horizon. People need confidence in what to expect to receive from the state, so we can’t afford cliff-edge moves to means testing, or sudden increases to the state pension age.

“We need to get better as an industry at highlighting to individuals how much they are due to receive, so they can then work out how much private pension they need to make up the gap between this and their aspirational income in retirement. If someone were to buy a state pension at retirement it would cost at least £273,000 as a one off payment to secure a weekly income of £151.25. This is significantly more than the £63,815 those approaching retirement have on average in their private pension, highlighting just how fundamental the state pension is to people’s retirement plans. If an individual wanted £303 a week in retirement, they would need an equivalent private pot of £273,000 on top of their state pension.”