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Reduced pension funds force over 55s to continue working

27 August 2009 / by Andy Davies

One in three people on the verge of retirement are putting their plans on hold as the recession forces pension fund values to fall.

According to figures published by MGM Advantage, around 1.85milliion people over 55 are continuing to work in a bid to replenish their pension income, whilst waiting for the stock market to recover.

The retirement income specialist found that 23 per cent of people aged over 55 will now have to work beyond the state retirement age of 65 as they have reduced retirement plans after seeing their funds hit by the economic downturn.

As the FTSE 100 index fell to its lowest level for six years in March, this left many people with defined contribution pension schemes facing a reduced pension income.

Commenting on the findings, Craig Fazzini-Jones, director at MGM Advantage, said: "One of the most worrying consequences of the economic turmoil is the knock-on effect for those approaching retirement.

"Millions of people nearing the end of their working life have been forced to slog it out for a few more years to see if their pension pots will make any kind of recovery. For many it is not a choice, but a necessity."

The survey shows that some people are now trying to find other ways to fund their retirement with around nine per cent of over 55s considering releasing equity on their properties to boost their pension funds.

But, MGM Advantage's research suggests that 32 per cent of over 55s are not prepared for retirement, while the figures also found that 35 per cent of over 55s have not made any plans for their retirement.

Mr Fazzini-Jones said: "It is hugely concerning that so many people are so unprepared for retirement. There is a definite need for those approaching retirement age to make the most of their pension pots and one of the best ways to do this is to compare the market for the best deal when it comes to converting your pot into annual income."

He added: "If you are approaching retirement you have to balance living for now with how you want to live in the future. No other financial decision you will ever make effectively asks you to choose how you want to lead your life for the next 30 years, so it's a big one to get wrong."

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