I don’t think any of us ever thought we could enjoy the life of Riley in retirement if we had to live off the state pension. Just how grim the UK state pension is has come in a report from the Organisation for Economic Co-operation and Development (OECD).
Its report shows the UK’s state pension is one of the least generous in the world and that only two of the 34 countries that make up the OECD, Mexico and Chile, pay poorer pensions.
Meanwhile countries like Turkey, Russia and Greece pay significantly bigger retirement incomes, according to the report, Pensions at a Glance 2015.
The study compared pension income to the salaries that people earned while they were working and it found that typical pensioners, who had previously earned an average income, earn just over a third of what they do when working.
The basic state pension is currently worth £115.95, but will rise to £119.30 in April 2016, as a result of the triple-lock.
From April, those on the new flat-rate pension will be able to get up to £155.65, but they will need to have 35 years of National Insurance Contributions(NICs) to claim the full amount.
While the Government has made efforts to improve the UK’s state pensions over recent years, the state pension is unlikely to cover more than life’s essentials.
Unless great aunt Agatha bequeaths you an unexpected inheritance or you win the Lottery, to be able to enjoy a comfortable retirement, a private or workplace pension or retirement savings of your own are essential. And the sooner you start, the more you’re likely to have when your golden years arrive.