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UK savers facing pension shortfall

UK savers facing pension shortfall

Category: Pensions

Updated: 03/07/2017
First Published: 07/04/2011

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 It is now over 6 months old so the content may be out of date.

UK savers could face a shortfall in their pension funds unless they are able to work into their 70s.

Annuity rates have fallen in recent years, meaning the typical male pension saver wanting to retire on a similar pension income to that which he would have achieved five years ago will now need to work for an additional six years and one month.

As a result, the average male will now only be able to afford to retire when he is 71.1 years old.

The research by AXA has revealed that pension affordability has fallen by almost 40% since the end of 2005 and the average male saver who chooses to go ahead and retire today would face a pension of just over half what he could have obtained five years ago.

But it is females who have been hit even harder than their male counterparts.

The female pension affordability age now stands at 71.3 years, meaning women who wish to a retire on a similar pension income to what could have been achieved five years ago face staying in work for an additional six years and four months.

"Due to significant market volatility in recent years, pension savers face a significant shortfall in retirement income or a much later retirement age," said Mike Morrison, head of pensions development at AXA Wealth.

Despite this, it appears that Britons' desires and expectations in relation to their retirement age differ greatly from the reality.

While figures show that people will only be able to retire when they reach an average age of 71.2 years, the average age people think they will be able to retire at is 64.

The average age people would like to retire is even younger, at 58 years old – some 13 years less than they will likely have to work for.

Such stark figures should act as a warning for people to get their retirement finances in order as soon as possible.

If you're approaching retirement, our annuity best buy charts are an ideal starting point when searching for the best annuity rates.

an online annuity planner service, such as that offered by Premier Retirement Services, should also be considered.

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