Retirement contributions fall by £342 a month

Posted on May 28th, 2011 | Categories - Retirement, Savings

Retirees are saving less for their future.

People are setting aside less cash to fund their twilight years.

A fifth of British workers nearing retirement have cut their pension savings by an average £342 a month, a report from online insurer LV= has shown.

The figure equates to a loss of £4,104 a year and £11 billion in total nationwide, which is double the fall in pension contributions recorded in 2009 and slightly higher than 2010 losses.

People with private pensions made cuts of £434 a month where as public sector pension holders slashed their contributions by £321 a month.

The study also revealed that 17% of over-50s do not want to work beyond the age of 65 but they may be forced to due to a lack of pension funds.

A quarter of participants did not know that the current pension credit system will be replaced by a flat-rate alternative in 2015 and three quarters were unaware that the requirement to purchase an annuity at the age of 75 has been abolished by the government.

Ray Chinn, head of pensions at LV said: “The Coalition Government has proposed and made a significant amount of changes to our pensions’ system which is yet to register with many people in or nearing retirement”.

He added: “Despite these changes, there is still no indication that any will act as an incentive to get people saving, and saving more, for their retirement years. In fact, our report has found quite the opposite, as a significant number are still cutting back on what they save each month and by a greater sum as time goes by”.