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22 Mar 2017

One in seven will retire this year with no pension

New research claims that one in seven people retiring this year have not adequately prepared their finances for retirement, the FT Adviser writes.

According to Prudential´s tenth annual retirement report, too many people nearing retirement have not saved enough - or any - money into a pension fund, making them entirely dependant on the state pension for their retirement income.

The online survey questioned 10,605 non-retired UK adults, including 1,000 who intend to retire in 2017. Of this number, nearly one in seven people retiring this year have not prepared sufficiently, with 11% being either totally or somewhat reliant on the state pension when they give up work.

Prudential´s calculations show that those relying solely on the state pension when they retire will receive £1,400 per year less than the minimum single income standard of £186.77 per week, as set out by the Joseph Rowntree Foundation. This is used as the benchmark income needed to support an acceptable standard of retirement living.

Under the new flat rate pension, a person retiring after 6 April 2017 will have a weekly income of just £159.55, amounting to an annual income of £8,300.

The gender gap between men and women has started to shrink, but still 19% of women are set to retire without a pension fund this year, compared with 9% of men.

While the state pension is an important part of pensioners´ income, Prudential retirement expert Stan Russell advised that it should be viewed as just one element of retirement plans.

He stressed, “it is important to try to save as much as you can from as early as you can, to help to avoid financial struggles during retirement.”

Copyright M2 Bespoke 2017

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