UK Pension Statistics 2022-2023

The State Pension is the money that people above a certain age are entitled to in retirement, provided that they have made National Insurance payments for a set amount of years.

The maximum amount of money you can receive through the State Pension scheme is currently £185.15 per week.

However, if you have gaps in your employment or you were self-employed and did not request the State Pension when you became eligible for it, you will receive a lower amount than this each week.

Who is Eligible For a State Pension?

To benefit from the State Pension in 2022, you must have been born on or before the 6th April 1951 (for men) or the 6th April 1953 (for women). You must also have been making National Insurance payments for a total of 30 years.

Another way to qualify is to have enough National Insurance credits. You would earn these by caring for a family member, being too ill to work, or being unemployed.

What is a Private Pension?

A private pension is a way to save money for retirement if you are not eligible for the State Pension, or if you want to add to the amount you would receive through the State Pension.

The most common type of private pension is a workplace pension. This involves your employer putting money into your pension automatically, and you would be able to top-up these funds if you wanted to.

It is possible to back out of this scheme, but you would have to request to do this given that everyone is automatically enrolled onto the workplace pension (1).

Some self-employed people choose to invest in private pensions as they do not have a workplace pension available to them. This is fairly uncommon for self-employed people to do, but it is strongly recommended due to the increasing rates of later life poverty.

Who is Eligible For a Private Pension?

Anyone over the age of 18 is eligible to start paying into a private pension. However, many young people feel as though they cannot afford to do this, or they would rather spend their money on other things, so it is uncommon for 18-year-olds to save for their pension.

How Did the 2022 State Pension Scheme Differ From 2021?

In 2022, it was announced that the administration of pensions tax relief is going to be modernised. We do not know the exact details of this yet, but it represents an effort from the government to adapt the pension scheme to the modern day.

Another difference is that the Finance Bill of 2021-22 revealed that the minimum pension age was going to increase from 55 to 57, by 2028 (2). This will not affect pensioners in 2022, but it is a confirmation that the State Pension age will continue to rise, affecting people who will retire from 2028.

Finally, there was good news for low-income earners in 2022. As of 2024-2025, they will be able to claim a top-up to their State Pension if they are contributing to net pay schemes.

UK Pension Statistics 2022-2023

Below, we outline a number of UK Pension statistics for 2022-2023.

1. The average retirement age was 65 for men and 64 for women

Though the minimum retirement age is 55, increasing to 57 by 2028, men chose to retire at the average age of 65, and women at the average age of 64.

People choose to delay their retirement for a wide range of reasons. Many people cannot yet afford to retire at 55, they want to benefit from the increased income that comes with deferring their State Pension, and/or they enjoy working.

2. The average value of pensions decreased by more than 33%

The value of the average pension in the UK decreased by more than a third in 2022, from 23% of a pensioner’s pay to just 14%.

3. State pensions rose by 2.42% since 2021

Since 2000, the government has spent a predicted £6.25 billion on the State Pension. In 2022, they spent 2.42% more on the scheme than they did in 2021, with a total of £98.8 billion pounds put towards State Pensions.

4. There is a 55% charge for withdrawing pension funds before the minimum age

If you choose to access your State Pension before you turn 55, you will receive a 55% tax bill. On the other hand, if you wait until after the minimum age to withdraw funds, you will receive more money.

Waiting 9 weeks will result in a 1% top-up to your pension, and an extra 1% is added for every 9-week period that you do not dip into your State Pension funds.

This only applies to people who retired after April 2016, as it is a new scheme.

5. 69% of pensioners benefited from a private pension

In 2022, it was very common for pensioners to have a private income as well as the State Pension. 69% of people in retirement had a private pension income (3).

6. One-sixth of employed Brits reduced their pension contributions due to the pandemic

As a direct result of the COVID-19 pandemic, an astonishing 16% of employed people in the UK reduced the amount of money they were putting into their pension. 7% of employed people stopped making contributions entirely.

We can predict this was linked to job loss, a lack of family support for childcare, and rising bills due to being inside the house for the majority of each day.

7. The State Pension Increased by 2.5% in 2022

Perhaps in line with the rising cost of living, the State Pension saw a 2.4% increase in 2022. In terms of weekly income, this amounts to an additional £4.40 for pensioners to use.

8. 4% of people retired early, and 4% of people retired late

The same amount of employed people retired early as they did retire late. Retiring early means stopping work before the age of 55, and retiring late would be to stop work after this age.

9. Employers contributed at least 3% of their employees’ wages to their pensions

This goes without saying, as it is a legal requirement for employers to contribute 3% of their employees’ income to their workplace pension.

10. More men than women contributed to their pension

3.94% more men than women made contributions to their pensions. A significant reason for this may be that women are still more likely to take over childcare responsibilities, so they would tend to spend less time working. However, this is a generalisation.

11. 31% of the self-employed saved for retirement

Perhaps quite concerningly, only 31% of self-employed Brits in the UK saved for their retirement in 2022.

It is possible that self-employed people would start to put away money for retirement in their later years, but it is well known that you should begin to save early if you want to have a comfortable retirement.

12. 16% of private-sector workers under the age of 22 had a workplace pension

We have stated that the workplace pension involves auto-enrolment, so the people under the age of 22 who did not have a workplace pension will have most likely opted out of this scheme.

This is supported by the fact that 78% of employees aged 22-29 were eligible for auto-enrolment.

Can I Release Equity If I Have a State Pension Or a Private Pension?

Yes, you would qualify to release equity regardless of whether you had no money in a pension, or you had plenty of funds in both a State Pension and a private pension.

However, if you put your equity release funds into a savings account after receiving your loan, it is possible that your State Pension would be taken away as you would have exceeded the savings threshold.

If you released enough money from your property, this may not be a problem. Some people even choose to take out equity instead of putting money into their pension.

They may do this if they live in a very valuable home that has appreciated in value since they moved in, as they could benefit from the value of their property without dipping into their savings or having to move house.

Moreover, as equity funds do not have to be repaid, some pensioners prefer to rely on money from their home rather than a pension, as it is usually a higher amount, and there is no disadvantage in withdrawing the money as a lump sum.

Even better than this, the money is tax-free, whereas all pensioners are required to pay tax on their State Pension.

Do I Have to Be a Pensioner to Take Out Equity?

No, you do not have to be a pensioner (someone who is receiving the State Pension) to take out equity. You also do not have to be retired.

The equity release scheme is generally viewed as a scheme for pensioners as it provides money for retirement.

However, you are permitted to release funds while you are still working. In some cases, this is even recommended as you would have two reliable sources of income to work with.

If you are over 75 and you earn less than £40,000, we would strongly recommend using both your pension and equity release to improve your financial situation.

Not only would you benefit from lower interest rates and higher loan amounts at this age with equity release, but you could also be entitled to 100% tax relief from your State Pension.

Contact Equity Release Warehouse

As you can see, you could save a lot for retirement by putting money into a private pension and making yourself eligible for State Pension.

However, not everyone can afford to spend their wages on their pension, and not everyone is working for a long enough period of time to be able to qualify for the State Pension.

For this reason, we would recommend that you consider equity release, given that this scheme is not reserved for people who have been working a set amount of time or who have enough money in their savings.

Anyone above the age of 55 with property worth more than £70,000 can take out equity, whether they have a pension or not, whether they are wealthy or cash-poor, and whether they have savings or not.

Get in touch with us at 0330 058 1579 to find out exactly how you and your family could benefit from releasing equity. If you have reservations about the scheme, we are more than happy to tackle the controversial side of equity release in an honest way.

Our FAQs page may also be of use to you, as it answers many of the worries our clients initially have.

References

[1] Do you get both the State Pension and a workplace pension? https://www.gov.uk/new-state-pension/youve-been-in-a-workplace-personal-or-stakeholder-pension

[2] UK Pensions https://www.linklaters.com/en/insights/publications/year-review-year-to-come/2021-2022/legal-topics/uk-pensions-year-to-come-year-in-review

[3] Pension Statistics in the UK  https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances

[4] 29 Pension Statistics in the UK That Might Surprise You https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/workplacepensions