Home Business NewsEconomic News Londoners hit by dwindling retirement incomes

Londoners hit by dwindling retirement incomes

by LLB Editor
11th Jan 12 10:20 am

Retirement incomes in London have fallen from 2010, a survey by Prudential has revealed.

People who expect to retire in the capital this year will receive £17,900 per annum on average, compared to a typical income of £18,258 in 2010. However, this is considerably higher than the national average, which is calculated as being £15,500 for 2012 – more than £3,000 less than the £18,600 newly retired people could expect to receive in 2008.

This average retirement income – consisting of private, company and state pensions – is the lowest for five years, as pensioners find their disposable income squeezed due to the difficult economic climate. People retiring this year will receive 16 per cent less than their 2008 counterparts did each year.

The survey also revealed a considerable gulf in retirement income from region to region. While Londoners are expected to receive £17,900 on average, people in other regions could receive as much as £5,000 less each year.

The situation appears to be particularly desolate in Yorkshire and Humberside, where the average expected retirement income was £12,800 this year. A fifth of those retiring in 2012 expect to get by on less than £10,000 a year.

Unsurprisingly, just 37 per cent of people who expect to retire this year feel they have saved enough money to live comfortably. Pensioners have seen their disposable incomes squeezed by high living costs, including soaring fuel bills, at a time when their savings pots have struggled to make real returns while the base rate remains at the record low of 0.5 per cent.

Expected retirement incomes have been on a downward slide since the study began, apart from last year when people were planning to retire on £16,600 annually – £100 a year more than in 2010.

Vince Smith-Hughes, Prudential’s head of business development, said: “The current economic climate has created the perfect storm for people in the run-up to retirement.

“The impact of the credit crunch, banking crisis, recession and concerns over the eurozone has been reflected in the fact that expected retirement income levels have hit a five-year-low.

“It is concerning that expected retirement incomes are going down, while pensioner expenditure is going up.”

The study took into account 1,003 people who are retiring this year.

Meanwhile, the Association of Consulting Actuaries (ACA) has called for fresh incentives to boost retirement savings as auto-enrolment approaches after the body warned of a “seismic collapse” of private sector pensions.

The ACA reported a growing trend of employers who were reviewing existing pension arrangements to cut their costs in the difficult economic climate, with nine out of 10 private sector defined benefit schemes now closed to new entrants.

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