The State Pension – Can you rely on it?

When can I retire? It’s a recurring question we get from our clients approaching retirement age. Forming the basis of retirement planning is understanding how your lifestyle will be funded once you take a step back from work and at the foundation of this, is the state pension.

However, greater life expectancy and a continued commitment to the triple lock increase to state pension has led to increases to state pension age on the horizon, and an ever-greater strain on government spending.

With the potential that State Pension as we know it may differ in the future, do we need to be more mindful and proactive in our retirement planning?

When will I receive a state pension?

The current state pension age is 66, although this is set to rise to 67 from 2026 to 2028 and 68 from 2044 to 2046; and with a review undertaken every six years on state pension age, further increases aren’t out of the question.

In the 2025/26 tax year, the maximum new state pension provides £230.25 per week (£11,973 p.a). For most, the current state pension provides a foundation of guaranteed income – especially if their workplace or personal pensions fall short of what they expect to need.

The current triple lock guarantees that the state pension increases each year by the highest of either average earnings, CPI inflation, or 2.5%. In April 2026 state pensions are due to rise by 4.8% in line with July’s earnings growth figure, meaning the full new state pension will increase to £241.30 per week (£12,548 p.a).

Given that Pensions UK estimates that the average person in retirement needs £13,400 a year to meet a minimum standard of living, it’s clear that the state pension still goes a long way towards meeting expenditure in retirement.

Will there even be a state pension by the time I retire?

According to a recent study, only 46% of Gen Z believe the state pension will still be in place once they retire, and of those who believe it will, many expect it to be a reduced amount.

While we don’t know what the future of the State Pension looks like, numerous reports and articles suggest that the current structure seems unsustainable in the long run and may be in need of reform.

The triple lock, combined with an ageing population, means that the state pension is becoming an increasing burden on government spending. The Office of Budget Responsibility’s (OBR) long-term fiscal projections believe that the state pension is the second-largest source of upward pressure on non-interest government spending after funding the health system.

In 1981, based on average life expectancy at state pension age (66), males were expected to live another 13 years and females expected to live another 17 years. Fast-forward to 2025, and the average life expectancy from the same age is now 19 years for males and almost 22 years for females. That’s an extra 4 to 6 years that the government now has to pay the average person a state pension! By 2050 this is projected to increase again by nearly 2 years.

Actions worth considering

State Pension Forecast

Checking your state pension forecast on the government website is a useful way to check what it is you’re entitled to at state pension age and when that is. It may also highlight any gaps in National Insurance contributions which can reduce your benefits.

Take stock of your pensions and investments

In many cases the state pension alone won’t be sufficient to meet the standard of living you would like in retirement. Therefore it is important to think about how this shortfall may be met from other sources. This could involve contributing further to your personal pension or taking stock of other savings and investments you hold for retirement.

Seek financial planning advice

Financial planning can provide a holistic view of your circumstances and give you greater piece of mind. Not only can professional advice help prepare for your retirement, but it can also put the next generation in a more favourable position.

Inter-generational planning is an excellent way to ensure your children and grandchildren have a head start and reduce the reliance on the state pension by the time they retire.

Ready to talk?

Reaching state pension age is a major milestone for many. It can be the point that people finally decide to step back from work completely or reduce their hours, with the reassurance of an added source of guaranteed income. Financial planning can help make the decision of when to retire a more reassured one and act as a sounding board for any further questions at this juncture.

At Carbon, we work with you to create a roadmap for retirement; whether you are currently accumulating wealth, approaching retirement, or just uncertain whether you have the retirement funds available to enjoy what is most important to you.

Important Note: This article is provided for information purposes only and should not be regarded as financial advice. Decisions should not be made based on this material without first consulting a qualified financial planner who understands your personal circumstances. Information is based on sources believed to be reliable, but accuracy cannot be guaranteed. This content is directed primarily at UK residents.