How YOUR pension has HALVED over the last 10 years, shock new figures- Lana Clements

How YOUR pension has HALVED over the last 10 years, shock new figures

PENSIONS have HALVED in the last decade, according to shocking new figures.

By Lana Clements

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Pension income has been hit over the last 10 years

The figures mean Britons retiring in 2017 will be massively worse off than those who finished work just before the 2008 credit crunch and subsequent financial crisis.

Calculations by financial services giant Fidelity have revealed today’s retirees have ben hit by a triple blow of falling real wages, lower market returns and reduced income from annuities.

People finishing work this year will typically have saved pension pots that are £40,000 lower on average than someone in 2007, according to Fidelity.

Lower savings levels add extra misery to this year's retirees who have already seen wage growth eroded by the cost of living by one percentage point below inflation over the past 10 years.

On the other hand, people who retired in 2007 typically earned wages that maintained their buying power at 0.9 percentage points above Consumer Price Inflation (CPI).

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It means that people who retire this year will have paid in £5,179 less to saving schemes over the 10 year before finishing work, compared to counterparts a decade earlier, according to Fidelity.

And it comes amid poorer stock market performance over the past 10 year than the decade earlier.

For someone earning £45,000, the savings pot at the end of the 10 years is £139,110 in 2017, compared with £180,106 in 2007, Fidelity found.

Worse still, savings today buy lower levels of income than 10 years ago.

This results in an annuity income that is at just £6,607 today, compared to £12,193 in 2007.

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Ed Monk, associate director at personal investing for Fidelity International said: “This all makes grim reading for the 2017 cohort of retirees yet it’s important not to abandon hope.

"In the period since the crisis the pension freedoms reforms have freed many more people to access their pension pot using drawdown instead of an annuity.

“This comes with greater risk but at least provides an alternative to being locked into low paying annuities and gives you greater flexibility over how you manage your income.

"For those still with some years to go before they retire, there’s a chance to make more of the time available left to save.

“Maximising contributions to take advantage of any employer contributions on offer as well as the help available from tax relief makes sense, as does ensuring your pension money is invested to take a level of risk that you’re comfortable with, but that will give you a chance of decent growth.”

Culled from Express