Best of the Week
Most Popular
1. Best Cash ISA Savings Account for Soaring UK Inflation - February 2018 - Nadeem_Walayat
2.Gold Price Forecast 2018 - February Update - Nadeem_Walayat
3.Bitcoin Crypto Currencies Crash 2018, Are We Near the Bottom? - Nadeem_Walayat
4.Trump Bubble Bursts, Stock Market Panic Dow 1175 Point Crash Analysis - Nadeem_Walayat
5.Gold Corrects, Bitcoin Markets Crash, Whilst Stocks Plunge - Nadeem_Walayat
6.US Treasury Bonds: Fuse to Light the Bonfire - Jim_Willie_CB
7.Dow Falls 666 Points As Cryptocurrencies Crash And Krugman Emerges From His Van - Jeff_Berwick
8.Stock Market Roller Coaster Crash Ride Down to Dow Forecast 23,000 - Nadeem_Walayat
9.Trading the Shadows - Oil, Dollar, Stocks, Gold Trend Analysis - B.R. Hollister
10.Stock Market Analysis: Baying for Blood - Abalgorithm
Last 7 days
World Stock Market Indices: What Will Happen in 2020 – 2022 - 25th Feb 18
Will We See A Cryptocurrency Wipeout This 2018? - 25th Feb 18
Stock Market Volatility Attributed to 'Shenanigans' - 24th Feb 18
Reintroducing The Concept Of Stock Market Investing Risk - 24th Feb 18
How Global Growth and Infrastructure are Driving Commodities - 24th Feb 18
Tips to Get Financing for a New Business - 24th Feb 18
Heavy Police Presence at Resumption of Sheffield Street Tree Fellings Protests - 24th Feb 18
Why You Should NOT Sub4Sub Free Youtube Subscribers - YTpals, Subpals, SubmeNow Test Results - 23rd Feb 18
One Belt, One Road, One Direction for Precious Metals - 23rd Feb 18
Gold’s Curious Sentiment - 23rd Feb 18
Relationship Between Crude Oil and U.S. Dollar in February 2018 - 23rd Feb 18
Why The Next Oil Boom Will Be Fueled By Blockchain - 23rd Feb 18
Gold Bull and Bear Markets - 23rd Feb 18
Why Recent Lows Are Crucial for US Dollar - 23rd Feb 18
Will Bitcoin be Larger Than NEO in 2018? - 23rd Feb 18
Stock Market SPX Probable Pop-n-drop - 22nd Feb 18
Stocks Fail to Hold Gains, But Still No Correction - 22nd Feb 18
Why We Should Buy Essay - 22nd Feb 18
The Latest US Debt Blow - 22nd Feb 18
6 Tips For Seamless Business Foreign Exchange - 22nd Feb 18
How to Anticipate Stock Market Trend Changes - 21st Feb 18
Gold Miners’ Rally? What Rally? Watch Out for More Fake Moves! - 21st Feb 18
5 Big Drivers of Higher Inflation Rates Ahead - 21st Feb 18
Goofy Indictments Divert Attention from Criminal Abuses at the FBI and DOJ - 21st Feb 18
Bitcoin or British Pound ‘Pretty Much Failed’ As Currency? - 21st Feb 18
Stock Market Waiting for the Fed - 21st Feb 18
National Identity Demands Restrictive Immigration - 21st Feb 18
Best Opportunities for Freelance Technical Writing Jobs - 21st Feb 18
4% US 10-year Treasury Note Yield Will Be a Floor Not a Ceiling - 20th Feb 18
Governments Are LYING about Their Gold Activities while Mining Companies Cower - 20th Feb 18
No Silver Lining Here - 20th Feb 18
Semi Conductor Stocks SEMI Bearish? - 20th Feb 18
The Prisoner Promised Land - 20th Feb 18
Best Car Dash Cam Review: Z-Edge S3 Dual Dash Cam - UNBOXING (1) - 20th Feb 18
How Inflation Reduces The Real Value Of Social Security Net Of Medicare Premiums - 19th Feb 18
Could Stellar Lumens be a Challenger to Bitcoin for International Payments? - 19th Feb 18
US-China Trade War Escalates As Further Measures Are Taken - 19th Feb 18
How To Trade Gold Stocks with Momentum - 19th Feb 18
Is a New Gold Bull Market on the Horizon? - 19th Feb 18
Stock Market Decision Point! - 19th Feb 18
An Inflation Indicator to Watch, Part 1 - 18th Feb 18
Get on Top Of Debt Before It Gets on Top of You - 18th Feb 18
Will the Stock Market Make a Double Bottom? - 18th Feb 18
5 Reasons Why Commodities Are the Investment Place to be in 2018 - 18th Feb 18
1 Week Later, Stock, Bond Market Risk Remains ‘On’ as 2 of 3 Amigos Ride On - 17th Feb 18
Crude Oil Prices: A Case of Dueling Narratives? - 17th Feb 18
Free 1000 Youtube Subscribers Services - YTpals, Subpals, SubmeNow Test - 17th Feb 18

Market Oracle FREE Newsletter

Urgent Stock Market Message

UK Retirement Incomes Still 27% Lower than 2008 Financial Crisis Levels

Personal_Finance / Pensions & Retirement Nov 01, 2017 - 02:15 PM GMT

By: MoneyFacts

Personal_Finance

Key findings:

• Record personal pension membership and contributions mask significantly lower retirement incomes than at the height of the 2008 financial crisis

• Pension fund performance continued to weaken in Q3 2017

• Annuity uncertainty still impacting pricing with the income gap between the most competitive and least competitive open market annuities now at a record low


A new report by Moneyfacts has revealed that while the total amount of money being saved into personal pensions may now have surpassed the pre-financial crisis high, the retirement incomes that are being delivered are still 27% lower than in 2008.

New 2015/16 estimates from HMRC show that personal pension contributions have now surpassed their 2007/08 peak, while personal pension membership is also at a record high. However, the latest Moneyfacts UK Personal Pension Trends Treasury Report found that today’s retirees are still receiving significantly less retirement income than similar individuals who retired at the height of the financial crisis in October 2008. The average retirement income based on a male contributing £100 per month into the average pension fund over a 20-year period and retiring at the age of 65 with a standard level without guarantee annuity fell for the second consecutive quarter, from £2,229 in Q2 2017 to £2,202 in Q3 2017. This is 27% lower than the equivalent retirement income of £3,004 in October 2008 at the height of the financial crisis.

Richard Eagling, Head of Pensions at Moneyfacts, said:

“Although some of the headline figures recently released by HMRC paint a picture of a reinvigorated personal pension market, they mask two major concerns: low individual pension contributions and subdued retirement incomes. With the retirement incomes being delivered by personal pensions and annuities significantly below the 2008 financial crisis levels, there is an urgent need for greater education and engagement to encourage individuals to make greater private pension provision.

“One of the biggest problems that individuals still face is understanding what is needed to deliver a good retirement income outcome, especially given the lack of official guidance. To this end, the Pensions and Lifetime Savings Association’s recent proposal to create a set of Retirement Income Targets, similar to those being employed to good effect in Australia, seems to offer a sound rationale.”

Pension fund performance: weaker growth

The Moneyfacts report found that pension fund growth continued to slow during Q3 2017, with the average pension fund delivering returns of just 0.9%. This compares with average growth of 4% in Q1 2017 and 1.4% in Q2 2017. Returns for Q3 2017 would have been higher but for a difficult September 2017, in which the average pension fund fell by 1.5%. Highlighting the more challenging economic conditions faced by pension funds is the fact that a third of the surveyed funds (33%) failed to deliver growth in Q3 2017, up from 29% in Q2 2017.

Annuities: verging on the inadequate

The report also revealed how the uncertainty that still surrounds the annuity market and volatile gilt yields are impacting annuity rates. Annuity pricing trends in Q3 2017 proved to be far from homogeneous, with some wide variations in pricing strategies depending upon the type of annuity and options chosen, and the purchase price.

Overall, across all annuity types (standard and enhanced) the average annual annuity income based on a 65-year-old fell by 0.2% at the £10K purchase price but increased by 1% at the higher £50K purchase price.

Richard Eagling, Head of Pensions at Moneyfacts, said:

“One of the key questions that the Work and Pensions Committee is seeking to address in its recently announced pension freedoms inquiry is whether an adequate annuity market is being sustained. It is still too early to say whether competition in the annuity market is now inadequate, but there are signs that it has weakened to such an extent that providers are reluctant to price themselves too far ahead of their rivals. In Q3 2017, the difference in the income payable between the most competitive and least competitive open market annuity narrowed markedly, from 13.9% to just 8%. This is the lowest level that we have ever recorded, surpassing the previous low of 8.3% at the time of the switch to gender neutral pricing in December 2012 which forced annuity providers to adopt ultra-cautious pricing.”

* Pension fund figures as at 1 October 2017 (based on a gross monthly premium of £100) and based on the average of all available pension funds. Source: Lipper.

** Annuity figures based on a male annuitant aged 65 buying a standard ‘level without guarantee’ annuity. Source: Moneyfacts.

www.moneyfacts.co.uk - The Money Search Engine

Moneyfacts.co.uk is the UK's leading independent provider of personal finance information. For the last 20 years, Moneyfacts' information has been the key driver behind many personal finance decisions, from the Treasury to the high street.


© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules