Latest facts released by the pensions industry are revealing some worrying trends with regard to our levels of pension saving - or not saving. The findings below certainly provide food for thought.
- 52% of British workers do not pay into a pension scheme, according to Halifax
- Of those who do save, most get started at 32, save on average £59 a month, and when discussing their retirement planning list their desired retirement age as 58. On that basis, their pension income (adjusted for inflation) would be just £1,716 per year*
- 90% of annuities purchased with pension savings are level annuities that do not keep in step with inflation, despite the fact that pensioners’ income needs increase over time, especially as their health declines
- Nearly 1 in 6 people have cut back their pension contributions in the last 5 years, says the Prudential. As a result, over the next decade 27% of retirees will depend on the state pension and their own savings
- The full basic state pension for a single is now just £95.25 a week, which is less than £5,000 a year
- Pension credits can top up the basic state pension to £130 a week for a single or £198.45 for a couple - but only if you have no personal savings or additional income of your own. While this is designed as a cash boost for the most vulnerable pensioners, many have called it a penalty imposed on those who have saved
- Based on that, a third of UK pensioners are now living below the poverty line, having retirement income less than 60% of the average national wage**
- In the private sector, pension provision is a changing landscape, moving the risk of pension investment from employer to employee. As companies draw back from salary-related defined benefit pension schemes, active membership in these high quality schemes is expected to fall from 2.5m people today to 1.5m by 2050
In consideration of all these facts, the bottom line is clear: as consumers we must take on responsibility for our own retirement planning, and work with a good independent financial adviser to set up, maintain and regularly monitor a personal pension.
*Source: Halifax/Hargreaves Lansdown: By 58 their pension fund would be worth £54,814 which, allowing for inflation, could be £28,380, giving an annual income of £1,716
**Source: EU statistics agency Eurostat & UK govt wage data
