Pessimism and misunderstanding could leave people facing poverty in retirement

Limited understanding of pensions in the UK could lead to a generation living in poverty in retirement reveals a study carried out by think tank, the Institute of Fiscal Studies (IFS).

Only 20% of people it spoke to aged 25-64 could correctly state how much a full state pension is worth per week.

And over half (58%) said they did not know, with most other people saying it was worth significantly less than its current level of £203.85 per week.

Regardless of whether they understood the state pension system or not, 73% said it does not provide a reasonable standard of living in retirement – only 14% said it does.

And only a fifth expect to be better off in retirement than their parents.

The study found the pessimism extended into the future of state pensions too, with a third surveyed saying that they don’t think the state pension will exist in 30 years.

In response to the study, the IFS has called for government to look for ways to make the system simpler to help boost understanding so people can be confident in planning for their future.

State pension – what will you get?

The amount you’ll get from your state pension depends on your national insurance payment record.

You can check exactly how much you’ll get at www.gov.uk/check-state-pension

The full state pension is £203.85 per week.

The can get more that the full state pension if:

• You have over a certain amount of additional state pension
• You defer taking your state pension

You can still get a state pension if you have other income like a personal pension or a workplace pension.

If you’ve reached state pension age and you’re on a low income, you might also qualify for pension credit, even if you’ve saved money for retirement.