Pension savers could be facing a bleak retirement, that’s the message from pension specialist Partnership.
New research has shown that retirement savers could end up living on an annual income of just £8,000.This is based on pension savings of £30,000, which would buy an annuity paying £2,000 each year.
This added to the £6,000 annual state pension means some could find themselves impoverished during their retirement.
According to Partnership, nine in every 10 pension savers retiring in the last five years had less than £50,000 and eight in 10 had less than £30,000 saved up.
Speaking to the Daily Mail, Philip Brown from Partnership said: “Millions of people are on a collision course with an impoverished retirement because they aren't saving enough. These figures show the burden on the already heavily stretched State is going to be massive.”
In another blow to pension savers, the Telegraph reported yesterday that annuity rates have fallen below six per cent for the first time in 20 years. This follows annuity rate cuts at Britain’s main pension providers including, Prudential, Legal & General, Standard Life, AEGON and Canada Life.
According to Billy Burrows, of Burrows & Cummins annuity specialists, savers with a pension pot of £100,000 would have been paid £6,080 annually in April but will now receive only £5,860.
He said: “First, bond yields have fallen in line with low interest rates. Retired investors are paying the price for bankers getting it so wrong in the run-up to the credit crisis.
"Increased longevity is another factor. Then there are the new EU rules that are causing insurers to take a more conservative approach, which they are building in to their annuity pricing."
Public sector pensions are also under threat after the Government’s announcement that they are set to face reform this autumn under their plans for tackling the national debt.
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