People are not thinking enough about pensions, says Prudential

13 February 2008 / by Joy Tibbs
According to a retirement survey from Prudential, UK adults retiring this year will receive an average annual income of £18,663, around £5,000 below the average salary income.

Life and pension managing director at Prudential, Gary Shaughnessy, said: “The UK’s pension crisis is far from over, and those retiring this year will have to survive on considerably less money than the average UK adult. This is bound to get worse as fewer people approach retirement with the benefit of a final salary occupational pension scheme.”

The Prudential Class of 2008 survey shows a significant discrepancy between men's and women's pension incomes, with men retiring this year expecting an average pension of £20,790 per year and women anticipating retirement income of just £11,291.

According to the study, the average age of a man retiring in 2008 is 60, while women are to retire at an average age of 58. However, a mere 46 per cent of those planning to retire this year feel their pension will afford them a comfortable lifestyle, with 36 per cent claiming it would certainly not suffice.

“When the effects of inflation and increased longevity are taken into account, many of those retiring this year will find their retirement income becomes more stretched as they get older," said Mr Shaughnessy.

He added: “To counter this, it is vital that people take time when considering their retirement income options. Often people feel that it is too late to make a difference, but that’s not the case. There are tax breaks leading up to retirement that many people fail to utilise.

"They should also remember that while annuities are a foundation for most retirement income, other sources such as lifetime mortgages, as well as using additional savings and investments can be considered to ensure that retirement income is maximised for the long term.”

This information is reinforced by a new study from Norwich Union, which suggests that many families struggle to cope with the burden of supporting children and grandparents and, consequently, cannot concentrate on their own savings and pensions.

Almost half of the adults surveyed are worried that their parents will not be able to live on their retirement income, while others are concerned that they will be forced to choose between supporting their parents and paying for their children while they attend university.

The research revealed that an incredible 63 per cent had not planned financially for their own retirement. "People face a never ending cycle of financial struggle," said head of annuities, Scott Brown.

© Fair Investment Company Ltd