State pension disaster as 'basic' DWP payments fall short of 'minimum retirement standard'

Half of UK adults are unaware of how much they will receive from their state pension, according to new research from Standard Life's Retirement Voice report.Analysts are sounding the alarm that payments from the Department for Work and Pensions (DWP) only cover a "minimum standard of living" by itself.Nearly a third (32 per cent) of those polled do not know the age at which they will qualify for their state pension, including 12 per cent of those aged 55-64 who are approaching retirement.Over half admitted they had no idea of the current value of state pension payments (51 per cent) and were also unaware of how to calculate their entitlement (52 per cent).More than a third (34 per cent) did not know that National Insurance contributions determine their pension amount, with 35 years of contributions needed to get the full amount.As of April, the state pension payment rate jumped to £11,973 a year for the 2025-26 tax year, inching it closer to the personal savings allowance.Tax analysts are warning that older Britons should expect to lose more of their payments to HM Revenue and Customs (HMRC) if the retirement benefit continues on this trajectory.This is due to the impact of fiscal drag, which occurs when incomes or inflation rise during a period of time when tax allowances are frozen.Dean Butler, the managing director for Retail Direct at Standard Life, commented: "With the state pension set to rise to £11,973 a year for the 2025-26 tax year, it remains a crucial part of many people's retirement income. "But despite its importance, there's still a lot of confusion around how it works and how much people might get."He added: "Knowing when you'll start receiving your state pension and how much you're likely to get is an important part of planning for retirement."Butler also warned about potential tax implications: "With the personal allowance frozen at £12,570 until 2028, there's a good chance that people will pay tax on the state pension alone from 2026 or 2027." Around 750,000 people are not receiving the correct state pension amount due to errors in National Insurance records or DWP failures to adjust for changed circumstances.Those who spent time raising children while not in paid employment should verify they received NI credit for this period, Butler claims.LATEST DEVELOPMENTS:State pension crisis looms as nearly half of new taxpayers will be retirees by 2027DWP could owe you compensation after state pension issue left older Briton £3k a year worse offState pension triple lock WILL NOT be axed as older Britons to get £1,900 windfallWomen whose husbands retired from 17 March 2008 should check their entitlement has been increased appropriately, while those over 80 on a low pension should ensure the DWP has assessed them for the over-80s rate.Universal Credit recipients should confirm they have been receiving NI credits. These checks are essential as errors could significantly impact retirement income.Butler asserted that the state pension only covers a "very basic lifestyle", falling short of what's needed for a "minimum standard of living in retirement", according to the Pensions and Lifetime Savings Association.As such, the retirement expert warns that state pension should therefore only form part of someone's overall retirement plan.