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Time ticking for UK’s pension savers

Time ticking for UK’s pension savers

Category: Pensions

Updated: 22/09/2010
First Published: 22/09/2010

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 It is now over 6 months old so the content may be out of date.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 vital importance of starting to save for your retirement at an early age has been highlighted by worrying figures.

The UK trails behind other European countries when it comes to saving for pensions, the report by Aviva in conjunction with Deloitte reveals.

In fact, the UK has the biggest individual pensions gap in the whole of Europe.

A pensions gap refers to the difference between the income needed to live comfortably in retirement and the actual income individuals can currently expect to receive in retirement.

According to the findings, the UK's pension shortfall amounts to a whopping £318 billion, meaning UK adults should be putting away on average £10,300 more every year in order to attain a comfortable retirement.

This average is based on 31 million UK adults due to retire between 2011 and 2051.

The findings highlight the importance of starting to save for your retirement at an early age, as it is much easier for a person in their twenties to make up the shortfall than it is for someone nearing retirement age.

For example, someone who is 50 years old today should be putting aside an additional £6,200 per year, someone who is 40 should be putting aside £3,100, and someone who is 20 should be putting aside £1,300.

"Today's research should act as a wake-up call for individuals and governments across Europe, particularly in the UK," commented Aviva's CEO, Toby Strauss.

"By investing from an early age, even a small amount can make a big difference in closing the gap. The younger a person is when they start putting money away, the more time they have to build up a sufficient fund to provide the lifestyle they desire in retirement."

Figures also show that more people than ever before are set to retire in the next couple of years.

When the country celebrates the Olympics in 2012 more than 800,000 of people – 150,000 more than in 2010 - will turn 65, according to the Department for Work and Pensions

The figures reveal that in 2030, there will be 5.2 million more people aged over 65 compared to 2010.

In order to get the best value for money from their pension pot, people approaching retirement should always take the time to evaluate the various annuity options open to them across the whole of the annuity market.

Remember that the annuity rate offered by your pensions provider might not be the best rate available, so its good a good idea to do some research.

So if you're nearing retirement and want to find the best return for your hard earned pension pot, why not check out our annuity best buy tables.

People in ill health, suffering from a particular medical condition, or who perhaps smoke could also be offered improved rates through impaired and enhanced annuities.

Find the best annuity for you - Compare annuities

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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