More means-testing on the horizon - PPI

Future pensioners face more means-testing as people become increasingly reliant on the state to provide them with a pension warns the Pensions Policy Institute

Furthermore, the decreasing value of contributory pensions, such as the basic state pension, will also push more people towards means-tested benefits.

According to PPI's latest briefing note - 'The balance between state and private pension provision' - the means-tested Pension Credit will become an increasingly important part of retirement income in the near future.

Warning how common it will be for pensioners to fall into the means-testing trap, the PPI says most people reaching state pension age in 2028 are likely to receive Pension Credit even if they work their whole lives and make average private pension contributions every year.

The falling value of contributory state pensions alongside the lack of private pension savings are two of the main reasons more people will become eligible to apply for Pension Credit.

Currently, just 15 million working people are putting money into a private pension leaving 20 million people without.

And although some people are clearly saving, it will generally speaking not be enough to make up the difference for the shortfall in basic state pension and second state pension, the Institute says.

The PPI states: "This means that the contributory system is slowly being replaced by means-testing."