Universal state pension equal to £200k private pot

The anticipated £140 flat-rate state pension will be equivalent to a private pension pot of £217,000, MetLife says.

Its analysis found a 65-year-old man would need £122,000 saved up to buy a £140 per week or £7,280 a year conventional annuity, whilst a woman of the same age would need £131,000.

For inflation-linked annuities, the same man would need a £195,000 fund, and the woman would need £217,000.

The current basic state pension is £97.65 per week, or £5,077.8 per year. For a flat-rate annuity, a 65-year-old man would need a private pension pot of roughly £120,000 to match this income.

"Private pension savers need funds of up to £217,000 to match the universal state pension but they now know that any savings will benefit them and will not affect state benefits, " says Dominic Grinstead, managing director, MetLife UK (pictured).

"The key issue that needs to be tackled when reforming state pensions is to get rid of means testing. The aim should be make the system as simple as possible so saving is encouraged. Every pound saved for retirement should be worthwhile and ending means testing will ensure that is the case."

Work and pensions secretary Iain Duncan Smith said on 7 March the DWP is ready to press ahead with state pension reforms, but did not confirm how much the flat-rate weekly payment will be.