One in seven people planning to retire this year will rely solely on the state pension, research from Prudential shows.
The provider surveyed over 8,500 people aged 45 or over as part of a study into peoples’ retirement expectations. Over 1,000 of the respondents said they intend to retire this year.
Some 14 per cent of people retiring this year have no private pension savings and will depend entirely on the state pension.
Almost 1 in 5 people retiring this year will have an income below the poverty line. The Joseph Rowntree Foundation says to be above the poverty line a single pensioner in the UK needs an income of at least £8,254 a year.
The report also highlights a significant gender split, with 21 per cent of women expected to retire below the poverty line this year compared with 14 per cent of men.
Some 23 per cent of women retiring this year will have no private savings, compared to just 8 per cent of men.
The research also reveals a lack of state pension knowledge among people retiring this year, with almost a quarter overestimating the value of the state pension by £600 or more a year and 10 per cent admitting they have no idea how much it pays.
The Government is introducing a flat-rate single tier state pension worth £144 a week in 2016 in an attempt to reduce the complexity of the current system. It has also introduced automatic enrolment, a reform designed to boost levels of private saving.
Prudential head of business development Vince Smith-Hughes says: “Relying on the state will see many people retiring below the poverty line this year, which shows the importance of building up a personal pension.
“Virtually everyone with the option of a company pension should take advantage of that, and the tax relief and employer contributions that go with it. When combined these often come to more than double the amount of pension contribution the employee has to make.
“If people want to enjoy a comfortable retirement, saving as much as possible as early as possible is important, while seeking advice from a financial adviser or retirement specialist can also help to make the most of retirement income.”