Retired households typically get nearly half of their income from benefits, highlighting the need for people to think about putting away more for their later years, according to a study.
The average retired household receives around 48% of its income from benefits, equating to around £10,800, with the state pension making up the biggest chunk, with an average £8,750 contribution per household, analysis of official figures by MetLife found.
By contrast, investment income accounted for 6% of household retirement income at around £1,420 a year per household.
Private pension income was found to account for around 42% of household income.
MetLife argues that the findings underline the need for people to have certainty over their retirement income.
It said that for the wealthiest retired households with incomes in the top 10% bracket, benefits were worth around 21% of household income.
For the least well-off households in the bottom 10% income bracket, benefits made up around 79% of their income.
Dominic Grinstead, managing director of MetLife UK, said: "The State Pension is a good safety net and other benefits will help maintain a basic standard of living for retired households.
"The reforms due next year with the flat rate single tier pension could provide further help but it is clear that people who run out of money in retirement will face major cuts in their standard of living."
He said that having certainty over retirement income was "more important now than ever", following reforms introduced in April giving people aged 55 and over more freedom about how they used their pension pot, rather than being required to buy a guaranteed income called an annuity.
Here are MetLife's tips for saving for later life:
:: Savers who are close to state pension age can get an estimate of how much their state pension will be worth when they retire. Contact the Future Pension Centre Helpline at www.gov.uk/future-pension-centre or 0345 3000 168.
:: Younger savers should join their company pension scheme. Employers are gradually being brought into workplace pension reforms which mean they will automatically place staff into a workplace pension.
:: All savers should keep a regular check on how much they have in retirement savings - and those who are close to retirement should start planning their budget.
:: Savers should save as much as possible and as early as possible for their retirement - pension saving offers generous tax breaks and Isas also offer tax-efficient saving.
:: People can consider getting independent financial advice - www.unbiased.co.uk can give names of local advisers.
:: Be wary of pension scammers, if something sounds too good to be true it probably is. The Money Advice Service - www.moneyadviceservice.org.uk can offer tips on what to watch for.
Average retired household 'receives 48% of income from benefits'
Pension experts at Mercer have identified the countries with the best pension systems. At number 10 is Singapore.
The system is based on the Central Provident Fund, which covers everyone in a job. Some of the cash can be withdrawn during your working life, and a prescribed minimum drawn down at retirement as an income.
Overall, Singapore scored 65.9 out of 100. It fared well on sustainability measures, and integrity, but relatively low incomes in retirement dragged its combined score down.
The UK scored 67.6 out of 100. The system was ruled to have great integrity, and good incomes in retirement. The overall scores were also up from the year earlier, as auto-enrolment was rolled out further, bringing more people into workplace schemes.
The researchers, however, were worried about how sustainable the system would be in the future. They called for an increase in minimum pensions, and added that more people ought to be encouraged into workplace schemes and persuaded to contribute more to their pension. They also wanted to see more people saving privately for their pension, and working later in life.
In Chile the state offers means-tested assistance, a mandatory centralised pension for employees to contribute to, and there are voluntary employer schemes.
Chile score 68.2 out of 100. Its highest score was for integrity, with another good mark for sustainability. Relatively low incomes in retirement let it down, and the researchers said the biggest improvements would come from raising the contribution levels.
Canada has a universal flat-rate pension - with a means-tested supplement. There’s an earnings-related pension based on lifetime earnings, plus voluntary workplace and private schemes.
It scored 69.1 out of 100. Its best score was for incomes in retirement, while it also performed well for integrity. Its only relative weak point was how sustainable it might be for the future - particularly because older people don't tend to stay in work.
Sweden has an earnings-related system with notional accounts - although this system was introduced in 1999 so it’s still in transition from a pay-as-you go system to a funded one. There’s also a means-tested top up.
Sweden was given 73.4 out of 100. It scored excellently for integrity, and well for sustainability. The overall score was brought down by incomes in retirement, and the researchers called for more workplace and private pensions.
Switzerland has an earnings-related public pension, a mandatory occupational system and voluntary private pensions.
It scored 73.9 out of 100. It fared well for integrity and reasonably well for incomes in retirement. The researchers just questioned its sustainability.
Finland has a means-tested basic state pension and a range of statutory earnings-related schemes. It scored 74.3 out of 100.
It had high integrity scores, with a less positive result for incomes in retirement, and a surprisingly low score for sustainability. The researchers called for higher minimum pensions, higher mandatory contributions and encouraging people to work longer to improve sustainability.
The Netherlands has a flat-rate public pension and quasi-mandatory earnings-related occupational schemes - which are industry-wide defined benefit schemes based on lifetime average earnings.
The system scored 79.2 out of 100. All its scores were high - particularly for the integrity of the system.
The system in Australia consists of a government scheme, a mandatory employer contribution into a pension, and additional voluntary contributions from individuals.
It benefits from the fact that all workers have been automatically enrolled in their company pension schemes for some time, so participation rates are high. The minimum contributions have also been raised recently, which means workers are building reasonable retirement incomes. It had an overall score of 79.9 out of 100, with the only question mark being over sustainability.
Denmark’s system includes a basic state pension, means-tested state top-ups, a fully funded defined contribution scheme and mandatory occupational schemes.
The researchers said it was "A first class and robust retirement income system". It scored 82.4 out of 100, with high marks across the board.