86% of mass affluent consumers expect the state pension to supplement their retirement income in some way- Nearly three quarters (73%) expect to qualify for the full state pension
- Yet 84% do not know how many years worth of National Insurance contributions are needed to qualify for this
- Lack of understanding over the State Pension leaves many in danger of falling short in their retirement income
86% of mass affluent consumers already do or expect the state pension to supplement their retirement income, according to new research from Charles Stanley.
Nearly three quarters (73%) of UK mass affluent consumers expect to qualify for the full state pension, yet there is an evident lack of understanding when it comes to contributions and what consumers will eventually receive.
Less than half (47%) of mass affluent consumers have actually ever checked their National Insurance (NI) record, meaning a large swathe of taxpayers may be unaware of what they actually qualify for.
Delving further into how well consumers understand the correlation between NI and what the full state pension is, the research asked how many years are needed to pay NI to qualify for a full state pension. On average, consumers think that one needs to pay 24 years of National Insurance contributions in order to qualify for a full state pension – 11 years short of what is actually needed.
Only 16% correctly understand that to receive the new full State Pension, one will need 35 qualifying years. To get any other form of State Pension, at least 10 qualifying years on your National Insurance record is required.
With so many admitting they will be reliant on the State Pension in some way when it comes to their retirement, this lack of understanding leaves many in danger of falling short in their retirement income.
Charles Stanley recently launched OneStep Financial Coaching, a new service designed to help people make financial decisions with added confidence. Consumers can pick up the phone to a financial expert to have a free 15-minute call to answer any questions about personal finances.
Lisa Caplan, Director of OneStep Financial Planning at Charles Stanley comments: “Retirement is a significant milestone that many people look forward to, but clearly it is also something that not enough people plan with sufficient attention to detail. Our figures show that at present, too many are putting themselves in the vulnerable position where their retirement will depend on the State Pension. The State Pension is, of course, something that can bring real value to retirement, but it is also only payable from 66 years old – which is also set to rise in the coming years. As it forms an important part of a retirement plan, it is important that people find out how much state pension they can expect.
“The onus very much rests on individuals’ shoulders now when it comes to retirement, and it is evident that more education is needed to help people feel more confident with their finances and understand what kind of retirement is in store for them. This is where expectation and reality could look very different to one another. Speaking to a financial expert can help individual’s stay on track to achieve the retirement they want.”
