Only one in two people believe the state pension will still be in existence when they retire, research by the Department for Work and Pensions (DWP) suggests.
The results of the DWP study, which also found 44% of people are certain the state benefit won’t be around, come as James Purnell, secretary of state for work and pensions, paid tribute to those that founded the benefit 100 years ago.
Purnell says the Government “owes a debt of gratitude” to those who fought for the first state pension in 1908, adding “we have a responsibility to look after today's pensioners whilst also being custodians of the state pension for future generations”.
He says the Government's commitment to restore the earnings link to the Basic State Pension means that, by 2050, it will be worth about double what it is today.
However, critics of the benefit argue it is, and will always be, an insufficient amount for people to live on given the cost of living in the UK.
SIPP provider European Pensions Management (EPM), AXA and Friends Provident have all spoken out recently about the inadequacy of the benefit, with Friends Provident today exclaiming its centenary was “no cause for celebration”.
Francis Moore, EPM managing director, says: “While it is good that the British government makes some provision in terms of a retirement income, it is fair to say that the basic state pension is not adequate for the needs of most retired Britons.
“On the one hand it is a guaranteed payment, but many people would consider that payment alone inadequate to meet all of one's financial needs in retirement.”
Friends Provident research suggests 87% of Britons feel the Government is failing in its aim to provide a state pension that will adequately help fund their retirement.
Jeremy Ward, head of pensions marketing at Friends Provident, says: “The state pension has changed drastically in the last century, yet it is an unsatisfactory means of financial support for many people.
“It is important for people dissatisfied with the state pension to take responsibility for their own future and make provision for their retirement while they are still working.”
The Old Age Pensions Act 1908 created a means-tested state pension of up to five shillings per week for some of the poorest pensioners aged 70 and above. The full pension was 5 shillings (25p) for single man or woman, 7s and 6d (38p) for a married man. In today's money that's £19.30 and £29. By the end of 1909, there were around 500,000 pensions in payment in Great Britain.
Today, 84% of us make it to collect our state pension - at 60 for women and 65 for men - and live, on average, for a further 24 years. There are around 11 million pensioners in Great Britain.
020 7034 2636
Have your say:
"Perhaps someone should also point out to Mr Purnell that the legislation enabling the Basic State Pension was passed in 1908, the first payments were not made until 1st January 1909. Then again, I guess that he is more interested in the spin than the facts! It was a Liberal Government then too, Lloyd George was Chancellor and Asquith PM – Labour were very much a minority party at that time (and really in their infancy to be fair). ‘Tis a bit like celebrating pensions simplification in 2104 or 2105 instead of 2106 – although I doubt there will be much celebration anyway! Thanks for the articles." William Crowley, IFAIFAonline
To promote 'long-term investment'
Switching 'hard and expensive'
Smaller funds still packing a punch
To drive progress