Those who aren’t entitled to pension credit are seeing their winter fuel allowance withdrawn and there’s since been speculation that the state pension could be means tested in future.

Against this backdrop, Aegon has highlighted just how much it would cost to replace the state pension with private pension savings. The pension provider has also highlighted just how vital the state pension is to so many, with more than 95% of us expecting to rely on it.

Steven Cameron, pensions director at Aegon, said: “For millions of people, the state pension is the bedrock of their retirement plans.

“While the full new state pension’s £221.30 a week won’t provide a life of luxury, to buy a lifetime guaranteed income to match this from state pension age (66) would cost a staggering £250,000.

“Put another way, unless you’ve built up a pot of over a quarter of a million pounds in your private or workplace pensions, the state pension will make up the majority of your retirement income.

“So, it’s not surprising that people are very reliant on the state pension to support their retirement living standards. Our own Second 50 research has shown for two years running that over 95% of people expect to rely on it, to varying degrees.

“This was before an estimated 10 million people lost their winter fuel allowance, and for many of them, every penny of their state pension really matters.”

Mr Cameron continued: “The fact is that the State Pension is worth a huge amount of money, and any suggestion that it might be ‘means tested’, so reduced or even removed for those with other retirement income above a given level, would send shockwaves through the pensioner community, impacting hugely on living standards for all but the truly wealthiest of wealthy.

“One way to secure a guaranteed income is to buy an annuity. Based on current annuity rates, a couple would need half a million pounds to ‘buy’ their state pension privately. And while this looks huge, it’s based on terms available today which are much better than they were a few years ago as annuities cost less when interest rates are high.

“With expectations that interest rates are likely to fall back to lower levels in the coming years, the cost will likely rise, making the state pension even more valuable.

“While many individuals now leave their pension pot invested and draw down an income, you’d still need a similar sum to be able to draw an amount equal to the state pension without taking too much risk that your money might run out before you do.”