Mind the gap – pension shortfalls on the rise - Pensions - News - Moneyfacts

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Mind the gap – pension shortfalls on the rise

Mind the gap – pension shortfalls on the rise

Category: Pensions

Updated: 04/04/2011
First Published: 29/09/2010

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The poorest people in society face a pensions shortfall of £7,500 a year, according to new figures.

The desired retirement income in the UK stands at £18,793 per annum, but the expected level of pension provision for semi and unskilled manual workers, casual and lowest grade worker and those that depend on the welfare state for their income is expected to average £15,557.

It is another stark reminder of the relative poverty suffered by some future pensioners if more effort is not made to put more money aside for retirement.

It is not just those at the bottom rungs of the pay scale that can expect a shortfall in their lives after work, however.

Research shows that those in higher managerial and professional roles are also likely to fall short in their expectations, and face a yearly pension gap of £4,890.

Whilst nearly half (47%) of consumers believe primary responsibility for retirement provision should lie with the individual, nearly a third (28%) of respondents believe that most of their retirement income will come from the state, a figure that increases for women (32%) and more than doubles (59%) for lowest grade workers.

Over half (52%) of respondents would also expect the state to look after them financially if their pension provision didn't provide them with enough to live off, revealing a huge reliance on the state to fill any gaps in retirement funding.

"The harsh reality of the present day is that many people do not realise the extent of their retirement savings gap until it is too late," said John Wright, head of public sector pensions at Hymans Robertson.

"Unless there is a decisive change in pensions policy and in attitudes to saving, many will not have an adequate income to ensure their dignity and independence in retirement."

With average annuity rates particularly low, it is more important than ever to consider your options before retirement.

Our annuity Best Buy tables reveal how the offerings from various annuity providers in the market compare, including names such as Saga and MGM Advantage.

We've also recently partnered up with Premier Retirement Services to provide you access to their online annuity planner service.

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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