UK Retirement Incomes Still Falling
The loss of about 10 per cent in UK retirement incomes have broken all records in just one year.
Observers blame the new pension freedoms landscape.
Thousands of UK retirees have withdrawn their pensions. Some have spent their money on holidays, car down payments and re-investment.
This had contributed to the higher rate decreases than standard annuities.
The numbers paint a bleaker picture as to how UK retirees can earn regular income as the risks become clearer.
A report by Moneyfacts used individuals contributing £100 gross per month into an average personal pension fund over a 20-year period. The individuals are also retiring at the age of 65 with a standard level without guaranteed annuity.
Experts and observers said that annuity sales are starting to revive despite the initial excitement of the new pension freedoms.
In fact, the new pension freedoms proved counter-productive for retirees.
Annuity providers who struggled with competitive prices might start to raise prices as many retirees shift to private pension through defined contribution schemes.
It has been dubbed as the “savings crisis” as base rates are down by 0.5 per cent in 2016.
According to Paul Avis of Canada Life, “Seven years of rockbottom interest rates have had a lasting impact on a generation already plagued by insufficient pension contributions, with many forced to work past the age of 65.
“Recent reforms have spurred a long overdue national conversation about pensions.
“A wave of employees have been confronted with the hard truth that they are going to have to work beyond the traditional retirement age.
“And the rising cost of buying a home could see younger people prioritising other long-term goals above pensions, leaving them in an even weaker position when they eventually approach the traditional retirement age.”