1 in 5 planning to retire in 2011 has no private or company pension

One in five (20 per cent) of those planning to retire in 2011 has no private or company pension and will be reliant on the State Pension to fund their retirement, according to new figures from Prudential’s Class of 2011 survey.

The annual study analysing the expectations of those planning to retire in the forthcoming year found that a staggering 28 per cent of women and 10 per cent of men (20 per cent in total) will rely on the State Pension and their savings to fund retirement.

Despite the State Pension providing such a large proportion of retirement income for a significant number of the Class of 2011, many retirees are unaware of the amount of money it pays. According to Prudential’s research a quarter (25 per cent) of those retiring this year thought that the State Pension would provide an income of at least £110 a week (considerably more than the

£97.65 a week currently paid out). Meanwhile around one in every 13 (seven per cent) of 2011 retirees admitted that they have no idea of the value of the State Pension.

Prudential’s research also showed that on average those planning to retire this year will rely on the State Pension for 37 per cent of their income, while 35 per cent will come from company pension schemes, 10 per cent from other savings and investments, nine per cent from a personal pension, six per cent from a part time job and two per cent from property (through rental or release of equity).

Vince Smith-Hughes, Head of Business Development at Prudential said: “If people want to maintain their standard of living in retirement, it is important that they start saving as much and as early as possible, and where available the vast majority should join company pension schemes.

“A fifth of this year’s retirees are completely reliant on the State Pension to fund their life in retirement. While State Pension levels are due to rise to around £102 a week later this year, this still provides a relatively low level of income, even taking into account the means tested Pension Credit or the suggested £140 flat rate, when compared to average salaries for workers in the UK.

“A lack of understanding of the value of the State Pension and Pension Credit means that many people planning to retire this year may have no firm idea of what their retirement income will be. Seeking early advice from a financial adviser should be a prerequisite to ensuring you achieve the level of pension income you want and need.”

Prudential’s research also found that retirees in the West Midlands are the least reliant on the State Pension, with only 12 per cent of this year’s planned retirees having no form of personal or company pension. However in Wales 29 per cent of those due to retire this year will be dependent on the State Pension.