Research by Just Group has found that state pension on average makes up nearly £6 in every £10 of income received by those aged 65 and over, and up to £9 in £10 of those in the lowest income groups.

Stephen Lowe, group communications director at Just Group, said their research highlights the vital role that state pension plays in maintaining living standards for the vast majority of retired people.

Lowe said: “The significance of state pension age on most people’s lives should not be underestimated – for many it marks the point where people can finally afford to step back from work and it provides the financial bedrock for later life.

“The rise in state pension to 66 by 2026 is now underway and, coupled with the planned rise to 67 by 2028, these changes are likely to have a major effect on the labour market. We can expect to see the growth in the number of older workers make up a large part of the rise in overall employment for the next decade.”

The data also showed that state pension is the largest income source for all groups, except those with annual incomes of more than £20,000 who receive a higher proportion of their income from defined benefit pensions than the state pension.

The research also revealed that 65% of those who are aged 65 and over started thinking about being able to afford to retire before their state pension age, while 18% said it was once they reached the state pension age.

And while only 15% of over 65s said they were able to retire completely living off the state pension, 57% said that state pension combined with their own savings and pensions had allowed them to retire.

Others said receiving it had supplemented their income but 8% claimed they still needed to work and 7% said it had allowed them to go part time, while 3% said they could switch to a less stressful and more enjoyable job.

Aj Somal, a certified financial planner at Birmingham-based Aurora Financial Planning, said the data shows that pensioners should not rely on the state pension as their main source of income.

Somal added: “This reports highlights the urgency of people to save towards retirement and not rely on the state pension as the main source of income. The earlier a person starts to save towards retirement the better, and the advent of auto-enrolment will hopefully help future generations of lower earners to have sufficient savings in addition to the state pension.”

Aamina Zafar is one of the UK’s leading financial journalists. She has previously worked as a senior reporter at FT’s Financial Adviser. The award-winning journalist writes regularly on the IFA community, mortgages, pensions and financial regulation.

Further reading on this topic:

Increase in state pension age delivers £11bn savings for government – Aegon