subject: Below Minimum Wage Shock For Retirement Britons [print this page] The true situation regarding retirement Britain is laid bare in the latest LV= State of Retirement Report.
It shows 6.25 million Britons aged over-50 (28%) have no pension plan in place and look set to rely on just the state pension in retirement, a huge increase on the 1.2 million people who live solely on the state pension today.
The basic state pension equates to an annual income of up to 5587 and averages at 9672 a year when you take into account additional benefit income (e.g. additional state pension, pensions credit etc).
This is up to 51% lower than the income someone in the UK working full time on the minimum wage would earn, which is 11,477 per year.
Even with Government plans to introduce a Universal State Pension at 140 per week, this will still provide an annual income significantly below the minimum wage.
When asked if they could live on the equivalent of the minimum wage in retirement, 43% said they couldn't live on that alone and over a quarter (27%) said they would really struggle.
For those who have private pension savings, the average income in retirement is currently 7488 a year. When you combine this with the state pension many people are still only living on marginally more than the minimum wage.
The LV= report also reveals that 15% of those already retired, or within five years of retirement have cut back on contributions to their long-term savings over the last 12 months, with an average decrease of 296 a month or 3552 per year.
This equates to a total of 8.31billion "lost" in retirement savings in the last year.
While these are significant cuts, a greater sum, 11billion, was shaved off retirement savings by this group in 2011 (343 per month). Savers into private pension plans have made the most significant cuts in 2012; an average of 523 per month over the last 12 months, compared to a 164 cut on average made by those with public sector pensions.
Ray Chinn, LV= Head of Pensions, said: "It is worrying that so many people are saving little or nothing for their retirement "wages", instead expecting to fall back on the state pension. While working hard up to their retirement to bring home a decent wage, I'm sure many will be disappointed to retire with an income equivalent of less than the minimum wage. If more people reflected on their pension as a 'wage' that they will potentially be relying on for over two decades, they might feel more inclined to plan ahead."
"Any job may be better than no job at all but people are having to make huge salary sacrifices to stay working. This is bad news for family finances and it is holding back our economy.
"Any hope of an economic recovery that benefits everyone rests on the growth of well-paid, skilled, full-time jobs. It is the only way for people to increase their incomes and get back to working to the best of their ability.
