People aged 40-64 are underestimating the full state pension by £1,461 a year on average, a study conducted by Just Group has concluded.

The company has found that seven in 10 over-40s underestimate the amount of the full state pension, with around a quarter guessing it is worth £6,000-£6,288 a year compared to its actual current level of £8,297.

Study participants questioned by Just Group aged 40-64 also estimate that their spending would be £10,400 a year if they were to retire today, with the youngest group guessing £11,213 and the older group £9,849.

Recent figures published by the Joseph Rowntree Foundation have suggested that the bare minimum needed for an adequate retirement is £10,187 a year.

Just Group group communication director, Stephen Lowe, said that the research showed that it was going to be very difficult for people to take a large amount of responsibility for their own pension decisions when they did not have an better expectation of how much income they were going to receive from their various pension sources.

He said that despite initiatives such as the Department for Work and Pensions’ current campaign to encourage people to request a State Pension forecast, more support still needed to be provided.

“At the moment many people don’t seem to have a realistic target of the income they will need in retirement,” Lowe said.

“If their aim is to reach the minimum income standards they are going to have a far poorer retirement than they probably bargained for.”

He added that providing better support and information through people’s working lives, including the Pension Dashboard to help show progress towards achieving a realistic target retirement income, mid-life financial MOTs and default guidance to ensure people consider all their options when starting to take pension benefits were all vital if people were to achieve better retirement outcomes.

Share Story: