Prudential: State pension does not provide "the basic cost of living"

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Prudential: State pension does not provide "the basic cost of living"

Wed 6th Aug 2008

Retired people cannot rely on the state pension to give a comfortable standard of living, Prudential has said.

Julie Mulvanny, head of business development for individual pensions at the financial services company, said that people "need to be saving an awful lot more at a younger age and get into that habit of saving" in order to have a decent retirement.

She added: "The problem we have is state pensions keep changing; although the basic state pension hasn't changed massively the second tier pensions keep changing in terms of affordability."

In her view, the state pension does not provide "even for the basic cost of living" as it "doesn't keep track with national average earnings" and pensioner inflation is much higher than that of working people.

Research from Prudential shows that 37 per cent of people lose sleep through worrying about their inability to save enough for retirement.

According to Age Concern, 2.2 million pensioners are in poverty before housing costs and 1.8 million in poverty after.

Poverty is defined as being in a household where income is less than 60 per cent of the median income of the general population.

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