A third of pensioners look to state for pension income

Some 31% of pensioners rely on the Basic State Pension and pension credits as their sole pension income.

This means that nearly a third of UK pensioners retire with no substantial savings or personal pension income, according to the Office for National Statistics, which this month has published new figures, showing a snapshot of the year 2007-08.

Pension income for those pensioners is currently £132.60 per week for a single person or £202.40 for a couple, including pension credits at the full rate. The single person’s pension income here consists of the Basic State Pension of £97.65 plus pension credits of £34.95, while the couple’s pensions income includes Basic State Pension of £156.15 plus pension credits of £46.25.

Workers have been urged by pensions experts to take more control over their pension planning, considering the likely effects on pension income of market trends and budget cuts in the coming years. The current overhaul of pension rules has left even the Revenue Commissioners HMRC in some confusion, and some pensions providers have said that the Revenue is struggling to deal with the many changes contained in new pension rules. The ongoing pensions review also raises questions as to whether it is wise to rely on the Basic State Pension, for your pension income, if your retirement is still several decades away.

A recent report from Sun Life claimed that the UK is gradually shifting responsibility for your own pension income from the state and private sector to the individual.

As a state, the UK is now Europe’s leading ‘pensions miser’, with the lowest state pension income in Europe, compared to average working pay. The pension income from the Basic State Pension is now just 30.8% of average working pay, compared with an EU average of 60% and far behind the generous levels offered in Spain (81.2%), the Netherlands (81.9%), and Luxembourg (88.3%).

In the private sector, 90% of the generous defined benefit or final salary pension schemes are now closed to new members, again placing the onus on the individual to make provision for his own pension income.