Exactly how much is needed for a 'basic' UK retirement after staggering pension pot rise

The average pension pot required for a basic standard of living in retirement has surged by 60 percent, research shows.

Analysis carried out by the Resolution Foundation and commissioned by the Living Wage Foundation shows the average soar from £68,300 in 2021-22 to £107,800 in 2023-24.

Researchers say the cost-of-living crisis has pushed up the cost of securing an adequate income in retirement significantly.

Director of the Living Wage Foundation, Katherine Chapman, said: "The news workers now require a significantly larger pension pot to cover basic living costs in retirement will undoubtedly be alarming for many, particularly low-paid workers who have borne the brunt of rising prices over the past two years.

"These workers are already struggling to make ends meet today, and the prospect of saving for the future feels even more daunting. No-one should have to choose between getting by today and securing their future."

A survey commissioned by the Living Wage Foundation found 53 percent of Brits saving into a pension felt they would never be able to retire while 62 percent felt they would have to work several years beyond retirement age.

Some 58 percent of women felt they would never be able to retire compared with 47 percent of men, the Savanta survey of 3,000 people found.

The Resolution Foundation's findings come as Chancellor Rachel Reeves and Prime Minister Sir Keir Starmer continue to face criticism from political opponents, campaigners and some of their own MPs over their decision to means test winter fuel payments, worth up to £300.

Only people receiving pension credit or other means-tested benefits will be eligible for the payment in England and Wales as a result of the decision, which ministers have said is needed to help plug a £22billion black hole in the public finances.

Meanwhile, Treasury calculations reportedly show the new full State Pension will see an above inflation rise of more than £400 a year in cash terms in April.

The internal workings reported by the BBC appear to show the State Pension will rise in line with average earnings figures out next week, the broadcaster said.

It would see the full State Pension for men who retired since 1951 and women since 1953 to about £12,000 in the next financial year.

Under the old system, the basic State Pension would likely rise to a minimum £300 per year to £9,000 in 2025-26 for those who retired before 2016.

Work and Pensions Secretary Liz Kendall will make the final decision over the increase.

The Government will be hoping the above inflation rise will compensate for its decision to scrap the Winter Fuel Allowance for millions of households.

Former pensions minister, Sir Steve Webb said about five out of every six pensioners living below the "poverty line" could be at risk of being stripped of their winter fuel payments.

Sir Steve, who is now a partner at pension consultants LCP (Lane Clark & Peacock), said analysis suggests about 1.6 million older people who are below what is commonly regarded as the poverty line do not receive pension credit.

It said while there is not an official poverty line, the main benchmark used, both in the UK and internationally, is having a household income below 60 percent of the national median average.

The latest DWP figures indicate in 2022/23 there were 1.9 million people over pension age across the UK living below this income level.

Analysis by LCP suggests 0.3 million of these people are receiving pension credit. It said the remaining 1.6 million do not receive pension credit and could potentially miss out.

People in this category may not receive pension credit simply because they have not claimed. Around 800,000 pensioners are thought to be in this position.

The Government has launched a campaign to encourage those eligible for pension credit to claim it.