August marks the one hundred year anniversary of the state pension, but Halifax has found that even 100 years on, a majority of Britons are in the dark about how their pension will work when they retire.
The number of people reaching the grand old age of 100 is the fastest growing demographic in the UK, the Halifax Pension Health Check has found, increasing by 90 per cent to 9,000 centenarians in 2006 compared to just 100 in 1908 when the state pension
was first introduced by Lloyd George's government.
The research found that 79 per cent of the British population are unaware of what age they will get their pension and how it will be paid. Even at retirement age, 83 per cent are still not sure how much of their pension they will be able to take as a tax free lump sum.
The difference in meaning between a personal pension
and a state pension
is a mystery for 61 per cent of Brits, 35 per cent do not think they are entitled to a state pension, of which 17 per cent believe retirees are not entitled to a state pension if they have a lot of savings.
However, almost half understand the meaning of an annuity
, while 65 per cent also understand that some pensions can be linked to the stock market for long term gain.
Halifax's research also revealed the deficit between retirement income from pensions and outgoings, with the state pension providing surmounting to just 16 per cent of the population's average weekly earnings.
Furthermore, the average pensioner's income is £93 per week, a far cry from the average British household's weekly outgoings of £433.
"Our research highlights confusion over pensions amongst the British public. We are issuing a timely reminder for people to start thinking about their retirement plans." said Karen Crowshaw, managing director at Halifax Financial Services.
"Costs are rising and people are living longer which means it is more important than ever before that people have the funds in place to support their lifestyle in retirement. It's important that people seek financial advice when arranging their pension."
© Fair Investment