Friday May 25 marks 'state pension survival day'

Updated

Friday May 25 marks the day when the average worker will have earned enough this year so far to equal a whole year of state pension payouts, an insurer has calculated.

Aviva, which made the findings, said the state pension can only replace the average worker's income for 101 working days a year, after weekends and bank holidays are taken into account - making May 25 "state pension survival day".

It said that, by reaching this point less than halfway through 2018, the calculation highlights the potential retirement income gap facing people who have nothing else but their state pension to rely on in older age.

The current full state pension gives retirees an income of £8,546.20 per year.

Meanwhile, an average full-time worker has £21,419.36 per year to live on after tax - around two-and-a-half times the state pension.

Aviva said that, excluding bank holidays and weekends, the average UK full-time employee has already been paid the equivalent of a full year's state pension after the first 101 working days of 2018.

A survey for Aviva has also found that nearly a fifth (17%) of workers believe the state pension will be their main source of retirement income.

Automatic enrolment, the landmark workplace pension savings drive, has been helping to bridge some of the savings gap, with more than nine million employees having been introduced to pension saving since the policy was first rolled out in 2012, Aviva said.

Alistair McQueen, head of savings and retirement at Aviva, said: "The state pension can only replace the average worker's income for 101 working days a year.

"Thanks to employer contributions and tax relief, more money goes into your workplace pension each month than comes out of your salary, so we urge people to think of the future and play the long game by putting saving first."

A Department for Work and Pensions (DWP) spokesman said: "The new state pension provides a strong foundation for people to build their private pension savings upon.

"Millions of people stand to gain from the new system in the coming decades and £120 billion will be spent on benefits for pensioners this year alone.

"We are committed to ensuring that pensioner poverty remains at a near record low and we have raised the basic state pension by £1,450 since 2010."

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