A recent study by retirement specialist Just Group using Office for National Statistics (ONS) data revealed that a significant number of households rely heavily on their state pension as their primary source of retirement income. The analysis found that over 1.2 million people, including 740,000 single retirees and 500,000 retired two-adult households, are predominantly dependent on the state pension.
According to the ONS, a household is classified as mainly reliant on the state pension if at least 75% of its total income comes from the state pension or similar pension-related state benefits. However, the state pension falls short of providing an adequate standard of living in retirement. Pension UK’s Retirement Living Standards suggest that a single pensioner requires an annual income of around £13,400 to meet the minimum living standard.
The current full state pension amounts to £230.25 per week, resulting in a shortfall of £1,427 annually for a minimum standard of living in retirement. David Cooper, director at Just Group, emphasized the need for bridging the income gap for retirees to achieve a basic standard of living, as the state pension is significantly lower than the recommended minimum income standard.
To improve retirement living standards, retirees are encouraged to explore potential eligibility for additional benefits that could help supplement their income. It is essential for individuals to check if they are entitled to unclaimed support, as this could make a substantial difference in enhancing their financial well-being during retirement.
The state pension undergoes annual increases following the triple lock policy, ensuring that it rises each April in line with the highest of earnings growth, inflation, or a minimum of 2.5%. Beginning in April 2026, the state pension will see a 4.8% increase, with the full new state pension rising from £230.25 to £241.30 per week, and the old basic state pension increasing from £176.45 to £184.90 per week.
Individuals retiring presently will typically claim the new state pension, requiring a minimum of 35 years of National Insurance contributions to receive the full amount.