There are concerns that the state pension may not be as generous in the future due to its rising cost
How can you increase your retirement funds right now?
Millions of people depend on the state pension, but its expenses are skyrocketing and are only going to get worse.
The entire new state pension is expected to cost the government £146 billion in 2025-2026, having increased in value by 55% in just the last ten years.
According to the Office for Budget Responsibility (OBR), it will cost 9 percent of GDP by 2075-2076, up from 5 percent currently. The OBR attributes this increase to the aging population and the expense of the triple lock policy, which causes the state pension to increase yearly by the highest amount of inflation, wages, and 2.5 percent.
Because pensioners will probably live longer but there will be fewer workers to pay taxes, the UK's aging population and declining birth rate are making things more difficult for taxpayers.
Watch the entire video here: According to the most recent data available from the Office for National Statistics (ONS), there were 585,396 births in England and Wales in 2025, which is the lowest number since 1977 (569,259) and down from 594,677 in 2024.
In the meantime, life expectancy is rising in the UK. According to the ONS, more than 19% of girls and 12% of boys born in 2024 should live to be 100. It is predicted that by 2049, this will increase to 18% for boys and 26% for girls.
ONS is the source.
The cost of the state pension is expected to rise to ever-higher levels due to these factors.
An aging population will also affect health spending, "creating greater overall pressure on public finances," according to Heidi Karjalainen, senior research economist at the Institute for Fiscal Studies (IFS).
What might the future state pension in the UK look like?
The government may decide to remove the triple lock and/or raise the state pension age above what is currently planned as a result of these rising expenses.
The IFS stated in a report published in April 2026 that there was a "good case for legislating for further increases in the state pension age beyond 68, as part of the response to rising life expectancy and the resulting public finance pressures" despite the fact that the state pension age will rise to 68 by 2048.
Many think tanks have urged the government to abandon the triple lock policy in light of the rising cost of the state pension.
Though the opinions of think tanks such as the Tony Blair Institute for Global Change (TBI), IFS, and the Intergenerational Foundation differ on how to address the growing expense of the state pension, they all concur that the public coffers should be relieved.
But at least for the time being, the triple lock will remain in place. Andy Burnham, the prime minister, has promised to uphold the policy and keep the commitment made in the Labor manifesto.
It's unclear what happens to the mechanism after that. However, some Brits appear unfazed by concerns that it may not be as common in the future.
According to a recent survey conducted by the investment platform Hargreaves Lansdown, two thirds of respondents stated they will rely on the state pension "to some extent" in retirement, while one in ten expect to be completely dependent on it.
How much does a comfortable retirement require?
The Retirement Living Standards published by the trade association Pensions UK provide an annual estimate of the amount of money required to maintain a particular standard of living in retirement.
The requirements, which are based on home ownership and after tax deductions, are updated annually.
A single-person household currently requires 32,700 annually to maintain a moderate standard of living. For a comfortable lifestyle, this increases to £45,400 annually.
13,900 is the minimum amount required for a single person to live comfortably in retirement.
According to calculations made by wealth management company Quilter, in order to match Pension UK's comfortable standard of living, you would require an overall pension pot of 691,000. You would require a total pot of 413,000 to reach the moderate level.
Quilters' calculations are predicated on someone getting a full new state pension (12,548 annually) and using their pot to purchase a 6.1% annuity.
Assuming 6% growth and after fees, a person who began saving for a pension at age 25 would need to make 270 monthly contributions to reach the 691,000 amount by age 66.
Assuming the same growth and after-fees, that same individual would need to contribute 162 per month to reach the 413,000 figure by the age of 66.
However, what would happen if your state pension was cut?
The amount of money required for a comfortable standard of living increases to 838,000 if an individual receives a new state pension of 3,583 annually (based on 10 National Insurance years).
In order to reach the moderate level, a pot of 560,000 is required.
In order to reach the 838,000 amount by the age of 66, a person who began saving for a pension at age 25 would need to make 328 monthly contributions, assuming growth of 6% and after fees.
Assuming the same growth and after-fees, the same individual would need to contribute 219 per month for the moderate standard of living in order to reach the 560,000 figure by the age of 66.
To scroll horizontally, swipe. Source: Quilter, based on a single-person home. Couples require a different amount of income.
How to prepare for retirement without having to rely on the state pension.
Raising contributions to the pension.
Increasing contributions to a pension plan at work is a smart place to start. A UK workplace pension requires a minimum contribution of 8%, which is composed of 5% from you and 3% from your employer, plus some tax breaks.
However, some employers will raise their contributions, and you can contribute more.
Consolidating your workplace or private pension can help you save money on fees and keep track of your savings if you're in your 30s, 40s, and 50s. But before you do this, take care to review the pension's features.
According to Helen Morrissey, head of retirement analysis at investment platform Hargreaves Lansdown, be sure you're not consolidating one that has a guarantyd annuity rate.
The rate at which guarantyd annuity rates are paid out is guaranteed. They can pay out significantly more than more contemporary plans and typically originate from older plans.
Morrissey continued, saying, "When looking to consolidate, make sure the new provider satisfies your needs. Do they offer the investment option you desire, the educational materials, or help desk access? These can prove to be very important."
Build different investment pots.
If you want greater flexibility in how you access your savings, you can also contribute to an ISA in addition to your pension.
For a self-employed person who may wish to take early withdrawals due to a lack of work and a decline in income, such a strategy can be helpful.
Morrissey stated: "Any income received will also be tax-free, and you can profit from investment growth in a stocks and shares ISA and still access money if you need it. When you use this in conjunction with a pension, you can combine the flexibility of an ISA with the tax benefits of a pension."
Are you able to increase your savings?
Make sure to monitor the effectiveness of your savings as well.
According to recent research by the savings app Spring, over 10,000 of the 227 billion dollars in current accounts were not earning any interest.
When you first start saving, it's a good idea to deposit the funds into a high-paying, easily accessible savings account and create an emergency fund that you can use for unforeseen costs like a boiler breakdown or job loss.
Generally, you should have enough money in this account to pay for necessities like your bills and mortgage for three to six months.
After this, any extra cash you have could be invested or saved. Long-term investing typically yields higher returns than putting money in a savings account, according to research.
But keep in mind that investing entails risks and that the value of your money could increase or decrease at any time. In order to give your investments time to weather any market downturns, you should typically invest any money for a minimum of five years.
If you invest, make sure that the funds in an ISA for stocks and shares or a general investment account are genuinely invested; avoid holding too much cash or money market funds.
Claire Trott, the head of advisory services at St. Jamess Place stated: "It may seem safe to leave money in cash or cash-like funds, but inflation and rising living expenses will eventually reduce their purchasing power."
Leave a comment on: How to prepare for retirement without using the state pension