One in five people planning to retire this year have no pension and will instead rely heavily on their State Pension to fund their retirement, Prudential has claimed.
According to the pension provider, 18 per cent of people planning to retire in 2010 will be retiring on the State Pension and savings they have accumulated.
However, Prudential has discovered that 31 per cent of people either do not know how much the basic State Pension pays or over-estimates the individual weekly amount by £25 or more.
According to the most recent figures published by the Office for National Statistics, the average weekly expenditure for a household headed by someone aged between 65 and 74 was £321.
As the current maximum weekly entitlement for an individual stands at £95.25, while a married couple receives around £152 a week, Prudential is warning that the basic State Pension alone may not provide a sufficient income for many, while urging people who are currently working to 'save as much as possible'.
Commenting, Martyn Bogira, director of defined contribution solutions at Prudential, believes these findings illustrate that there is "a clear need for people to understand the consequences of not making adequate provision for their retirement".
"If the basic State Pension is your only source of income you could be in an extremely precarious position financially. Just one significant financial emergency, like your central heating system unexpectedly breaking down, could cause serious financial hardship for people expecting to retire on the State Pension alone.
"On its own the basic State Pension, paying just under £5,000 a year, should only really be used to supplement other sources, such as income from a pension or an annuity," he said, before adding:
"The sooner you start saving, either into a company pension, personal pension or other savings, the greater the amount of money you can build up to help provide for you when you do come to retire."
© Fair Investment Company Ltd