Should You Still Rely on the State Pension? A 2025 Perspective
Dec 01, 2025
The UK State Pension has long been a foundational part of retirement planning. But as we move through 2025, economic pressures, demographic shifts, and policy uncertainty are raising important questions: Can you still rely on the State Pension as the core of your retirement income? And if not, what should you do instead?
In this article, we explore the current landscape and offer a financial planner’s perspective on what retirees—and those still saving—should consider now.
What Is the State Pension in 2025?
As of April 2025, the full new State Pension is £230.25 per week (£11,973.00 per year), assuming you have 35 qualifying years of National Insurance contributions. Those on the older basic State Pension receive a lower amount unless topped up with additional entitlements.
The State Pension age remains at 66 but is set to rise to 67 by 2028 and potentially to 68 in the 2030s.
The Problem: Rising Costs, Ageing Population
The sustainability of the State Pension is being questioned due to:
- Demographic pressure: The number of retirees is growing faster than the working-age population.
- Inflation and longevity: Higher living costs and longer life expectancy mean pension payouts need to stretch further.
- Fiscal constraints: The government is balancing pension payments with the need to control public spending.
While the Triple Lock (which increases the State Pension annually by the highest of inflation, wage growth, or 2.5%) remains in place, many experts question how long it can be maintained.
What Role Should the State Pension Play in Your Retirement Plan?
The State Pension is a valuable benefit, but for most people—especially higher earners or those with more ambitious retirement goals—it should be seen as a baseline, not a full solution.
Let’s look at a typical scenario:
- You receive the full new State Pension: £11,973/year
- The average household retirement spending (moderate lifestyle, according to the PLSA) is
£43,900/year for a couple.
That’s a significant shortfall each year—requiring additional income from workplace pensions, savings, or investments.
What You Should Be Doing Now
Here are five steps to strengthen your retirement strategy in 2025:
- Check Your State Pension Forecast
Use the Government’s online tool to see:
- What you’ll get
- When you’ll get it
- Whether you can top up your NI contributions
- Understand Your Retirement Income Gap
Work with a financial planner to project:
- Desired retirement lifestyle
- Inflation-adjusted income needs
- What your existing pensions and investments will provide
- Maximise Workplace & Private Pensions
Take advantage of:
- Employer contributions
- Salary sacrifice arrangements
- Personal pensions (including SIPPs)
- Invest Tax-Efficiently
Use ISAs, pensions, and other tax wrappers to:
- Minimise future tax liabilities
- Maximise growth potential
- Plan for Flexibility and Longevity
Consider income drawdown strategies, annuities, and other tools to manage your cash flow across a retirement that could last 30+ years.
Why Relying Solely on the State Pension Is Risky
- It won’t cover full living costs unless your expenses are minimal.
- Future policy changes could reduce benefits or eligibility.
- You may want to retire earlier than the State Pension age.
- It doesn’t offer inheritance options or flexibility.
Final Thoughts
The State Pension remains a useful and dependable base for many UK retirees, but it is not sufficient on its own for most people’s retirement aspirations. With rising uncertainty about its long-term value, the best approach is to treat it as part of a broader, more robust financial plan.
Want to understand your retirement readiness?
Contact our team today for a personalised pension review.
Approver Quilter Financial Services Limited Sept 2025.
Tax treatment varies according to individual circumstances and is subject to change. Tax Planning is not regulated by the Financial Conduct Authority.
