State pension still falls £2,643 short of a basic retirement income

With the state pension rising by 8.5% in April 2024, interactive investor comments on today’s IFS report The Pensions Review: the future of the state pension.

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Alice Guy,Head of Pensions and Savings, interactive investor says: “Although the state pension is rising by 8.5% in April, it’s important to remember that it still falls far short of the amount needed for a basic retirement income. Interactive investor calculations, based on the PLSA Retirement Living Standards, reveal that even after April’s increase, the state pension will still fall £2,643 short of the amount needed for basic retirement income. For a basic standard of living in retirement, pensioners would currently need £14,144 each year before tax, whereas the state pension is due to rise to just £11,501 in April. (Note 1)

“Scrapping the triple lock would lead to millions of pensioners facing a poor old age, as the state pension is currently not enough for even the most basic of retirements.

“Many of today’s pensioners worked during a time of the pension haves and have nots, when not all workplaces offered a pension. As a result, 28% of over 55s have no pension provision apart from the state pension, according to interactive investor research, released earlier this year. 

“For pension savers who are still working, it’s important to know that the state pension alone won’t be enough for a comfortable retirement. To achieve a comfortable retirement you will need to supplement the state pension by saving into a workplace or private pension.”

Note 1

The PLSA Retirement Living Standards are based on April 2022 prices. Interactive investor calculations have adjusted the amount needed for a minimum standard of living in retirement (£12,858 before tax) to reflect inflation until October 2023.