Calls to reform the state pension grow as analysts are reminding the Government that Britons “need a system that works for realities of today” ahead of the Pension Commission’s analysis of inadequacies across the retirement landscape.
A Department for Work and Pensions (DWP) report examining people born in 1958 has revealed substantial gaps in pension knowledge as this group approaches retirement.
The research, conducted by the Centre for Longitudinal Studies, found that 20 per cent of those studied were unaware of when they would become eligible for their state pension.
Additionally, a third of those surveyed by the researchers shared that they had no idea how much they would actually receive. The study identified several groups facing the greatest risk of entering retirement inadequately prepared.
Analysts are calling for a state pension system ‘that works’ for everyone
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Women, self-employed individuals, and those who experienced persistent low incomes were found to be particularly vulnerable, as were people with interrupted work histories due to long-term illness or caring responsibilities.
Half of all those surveyed depended on the State Pension for between 67 and 100 per cent of their total retirement income.
Single people and renters emerged as facing the highest risk of failing to maintain their living standards after leaving work, with nearly half of the entire 1958 cohort expected to experience this outcome.
Patrick Thomson, the head of Research Analysis and Policy at the Standard Life Centre for the Future of Retirement, said: “The latest DWP analysis of the 1958 cohort lays bare the scale of the challenge for the Pensions Commission.”
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He noted that this generation has experienced dramatic shifts, including rising state pension ages, the transition to defined contribution savings, automatic enrolment, and pension freedoms, yet too many remain underprepared for later life.
Mr Thomson highlighted stark inequalities within the group, stating: “Women’s DC pension pots are less than a third the value of men’s for this group.” The disparity reflects broader structural issues affecting retirement outcomes across different demographics.
The pension expert observed that current pension and retirement system assumptions were designed for people resembling the 1958 cohort, where 63 per cent are married, and 61 per cent own their homes outright.
However, he warned that future retirees will face markedly different circumstances, with more people renting privately, juggling work and home responsibilities, and confronting uncertain care costs.
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Mr Thomson added: “Retirees of the future will look markedly different, with more people privately renting, needing to balance their work and home lives, and facing uncertain care costs.
“We need a system that works for the realities of the way we live today. These findings highlight how crucial it is for improvements to be made to pensions adequacy alongside increasing participation among underserved groups.
“This means supporting people to stay in work for longer and helping them make the most of the savings they do have, for example, through initiatives such as Targeted Support.
“The Pensions Commission will need to confront these structural gaps if future generations are to achieve genuinely secure and sustainable retirements.”