Pension incomes in Britain nearly halve: report

Pension incomes in Britain have continued to fall rapidly over the past month, leaving 65-year olds with about half the amount of money they need to maintain an adequate standard of living in retirement, according to analysts.

With the latest fall in pension incomes, the average 65-year-old would be left with just £7,666 a year, a £259 a month decline according to the employee benefits company Aon Consultancy.

This is the first time that the amount has fallen to half the annual income of £14,400 - an amount adequate for an acceptable standard of living for pensioners as per the recommendations of the Joseph Rowntree Foundation.

According to Aon's analysis, the projected annual pension income for 30-year-olds fell by £518 over the past four weeks, while that for 60-year-olds fell by £358. Projected annual income in retirement for people 30 years of age now stands at £19,344, while for people aged 60 it has fallen to £10,466.

Aon has projected the retirement income of individuals of various ages who set aside 10 per cent of a £25,000 salary to a defined contribution pension. According to Richard Strachan, senior consultant at the firm, though there has been some improvement in the economic circumstances over the last six months, pension incomes are only marginally better than this time last year and pension incomes shrank once again during last month because of the volatility of the stock markets.

Strachan warned investors to keep a watchful eye on their pension income if they wanted not to end up in penury in retirement. He added that people should make suitable provision for their future.
 
According to another research company Defaqto, many people were approaching retirement with several different pension pots that might not be well invested. Instead of a number of smaller pension pots with different providers, consolidation into one pension plan might be a wise move, it said.