UK pensions are the lowest of any G7 country. In terms of average national earnings UK pensions are worth a mere 31% .

The UK is right at the bottom of the pension earnings list compared to Italy where pensions are worth 68%, 51.2% in France, 41.2% in the United States, 39.9% in Germany and 34.4% in Japan. In terms of this state pension ratio benchmark Canadian pensioners are best off.

In spite of this grim status quo and a continuous trend away from occupational pension schemes, 64% of UK residents still intend to rely solely on their state pension in retirement.

Today’s youth does not show any major concern over pensions, retirement is still a lifetime away. With the demise of the once much envied UK company pension funds, saving for retirement is all too often quite simply forgotten about, but with the current ‘state’ of pensions everyone should be thinking about what they are going to do when they can no longer work..

The number of active members in occupational schemes has crashed from almost 11 million in 1991 to just under 9 million in 2007.

Another worrying trend amongst today’s youth is the belief that equity will provide support in the future. 18% of 25 to 34 year-olds believe they will be supported by equity in the future; an idea that seems almost absurd in the current housing market. Lending criteria is becoming tighter, mortgages are becoming less and less available and then there is the ever-present threat of falling house prices for those who already own homes.

Ultimately, the housing ladder is becoming harder to climb by the day and only 7% of 18 to 24 year-olds believe they will have any equity to provide support in the future.

With the almost epidemic spread of the ‘buy now, pay later’ philosophy nearly 2% of the population are left with outstanding debt other than a mortgage to pay off in retirement.

Furthermore, from 2024 the retirement age will increase to 66 and from 2024 it will go up to 68. Life expectancy is also on the rise, meaning that the number of years spent in retirement will also increase.
In the 1950’s, for example, the average life expectancy of a male after retirement was a mere ten years but by 2016 this is expected to increase to 19 years.

While the outlook is predicting a grim future for UK pensioners, it is believed by many that the introduction of personal accounts planned for 2012 may offer some relief to the situation, however, there is great uncertainty regarding the scheme’s implementation.

Individuals relying on state pension alone may benefit from making good any years in which they did not pay contributions. The pension an individual is assigned, is calculated based on the number of years national insurance contributions have been made.

180,000 women are due to reach state pension age next year and one in nine of these women could still ensure a full state pension if acting now. Thousands more could top up their entitlement by paying top-ups.

The Department for Working Pensions (DWP) urges ‘soon to become’ pensioners to request a state pension forecast and take immediate action . Forecasts can be requested by filling in form BR19 from the DWP website. Forecasts will reveal pension accrued to date as well as the possibility to fund possible shortfalls.

Full national state pension is £95.25 a week. Women need to have paid national insurance for 39 years to achieve this. This will be reduced to 30 years in April 2010. However, even with the planned reduction in qualifying years, women are still expected to fall short.

Up to six years of National Insurance contributions can be bought back at £626.60 per year and individuals with considerable life expectancy may benefit greatly. Individuals anticipating to qualify for pension credit, however, should tread cautiously as these top-ups may affect the amount they are entitled to.

With state pensions facing a cold winter for the foreseeable future and company schemes thin on the ground, anyone without a pension should be seriously considering their options. Bricks and mortar is not as ‘safe as houses’ anymore and so releasing your pension early could help you to really make the most of your retirement fund.