There is an increasing amount of pensioners receiving more than half of the income from benefits such as the State Pension. Partnership reveal there is a lack of understanding surrounding eligibility for retirement income.

Over the past twenty years retirees have become increasingly dependent on benefits, with the proportion who receive over 50 percent of their income from this source rising from 41 percent (94/95) to 51 percent (12/13).

The biggest increase was for pensioner couples, with almost three out of five now heavily reliant on state support.

Many 40 to 70 years do not clearly understand the eligibility criteria according to Partnership. Over three quarters (77%) don’t realise that moving to Australia rather than Austria could see their state pension frozen. For those planning to retire in the UK, 59 percent didn’t realise that delaying their pension until they need it could increase their benefits and 43 percent were unaware they could pay voluntary national insurance contributions to make up for any years they missed.

Others were not aware that they needed to work for a certain period of time in order to qualify for the full state pension amount (29%) and that taking time off work to care for their family could result in a lower pension (26%).

Mark Stopard, head of product development, comments:

“While we have seen an increasing number of retirees reliant on benefits [including the state pension] for more than half of their income, many seem to lack a fundamental understanding of eligibility criteria and how to improve their income.  Taking simple steps such as paying voluntary national insurance contributions, delaying taking the state pension or ensuring you receive credits where appropriate mean that when people retire they can get the best possible outcomes.”

“This will naturally not remedy the issue of people putting insufficient savings aside for retirement but it will provide them with some level of regular income.  If people do choose to take advantage of the pension freedoms and take out all the cash in their pension, they will need to consider the impact it will have on any means tested benefits that they do receive including pension credit which many retirees will continue to receive in the transition to flat rate state pension from 2017 onwards.

“With 64% of people keen to secure a guaranteed income for life, taking out an annuity to make up the shortfall between the state pension and their day to day costs would mean they could then use the remainder of their savings to either pursue other income opportunities or for pay for non-essential expenses.”

% who said this statement was false True
77% If you move to certain countries when you retire, your state pension will be frozen If you move to the European Economic Area, Switzerland and certain other countries you will get an annual uplift. However, if you move to countries such as Australia, South Africa, New Zealand or Canada, it won’t.
59% You can delay taking your state pension in order to increase the rate when you do take it If you reach state pension age on or before 06 April 2016, you gain +10.4% for ever year you defer.  The new state pension will also offer increases.
43% You can pay additional money to ‘buy years’ if you have not worked for long enough You can pay voluntary national insurance (NI) contributions to get a full state pension, if you have not worked for sufficient years. This is particularly generous if you qualify for a pension prior to April 2016 and make payment before April 2017.
29% You need to work for a certain amount of years to be eligible for the full state pension You need 30 years of NI contributions or credits to qualify for the full state pension.  From April 2016, the length of time gradually increases.
26% Those who have taken time off to care for their families could receive a lower state pension As above, while some credits are automatic, others need to be applied for and as children age requirements change.

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