A recent study conducted by retirement specialist Just Group has brought to light the significant number of households relying heavily on their state pension as their primary source of retirement income. The analysis of Office for National Statistics (ONS) data reveals that over 1.2 million individuals, including approximately 740,000 single retirees and 500,000 two-adult households, are predominantly dependent on the state pension.
The ONS categorizes households as mainly reliant on the state pension if at least three quarters of their total income is derived from the state pension or similar pension-related state benefits. However, the state pension falls short of meeting the recommended standard for a comfortable retirement. According to Retirement Living Standards by Pension UK, a single pensioner would require an annual income of around £13,400 to attain a “minimum” standard of living.
The current full new state pension amounts to £230.25 per week, resulting in a shortfall of £1,427 annually to achieve the minimum living standard in retirement. David Cooper, director at Just Group, emphasized the disparity between the state pension and the minimum income standard recommended by Pension UK. He highlighted the necessity for retirees to bridge this gap to secure a basic standard of living in retirement, suggesting that exploring eligibility for additional benefits could help alleviate financial constraints.
The state pension undergoes annual adjustments in alignment with the triple lock mechanism, which ensures that the pension increases each April based on the highest of earnings growth, inflation, or a minimum of 2.5%. From April 2026, the state pension is set to rise by 4.8%, with the full new state pension increasing from £230.25 to £241.30 per week, and the old basic state pension rising from £176.45 to £184.90 per week.
Individuals who retire now will claim the new state pension, requiring a minimum of 35 years of National Insurance contributions to qualify for the full pension amount. It is crucial for retirees to explore potential entitlements to unclaimed benefits, as these additional resources could significantly enhance their retirement living standards.
