Shrinking pension pots become cause for concern

Posted on August 22nd, 2010 | Categories - Pensions

Pension pots are shrinking at a worrying rate leaving 65-year-old people with less than half the money they need to fund an adequate standard of living.

The figures, calculated by employee benefits company Aon Consultancy, show that the annual average pension income now stands at £7,666 – the Joseph Rowntree Foundation currently recommends that pensioners need an income of £14,400 to live a settled retirement life.

Richard Strachan, senior consultant at Aon, said: “Though we have seen some improvement to economic circumstances in the past six months, pension pots are in only marginally better shape than this time last year and due to the volatility in stock market activity, pension pots shrank once again during the last month”.

He added: “Individual pension investors should keep a watchful eye on their pension pots to ensure their retirement plans are on track, and make suitable provision for their future”.

Some experts suggest strengthening their pension investments through careful strategies. “Instead of holding a number of smaller pension pots with different providers, consolidation into one pension plan may be a wise move”, said David Abbis, writer for the research company Defaqto. “Planning can then be made towards retirement, with sensible investing and monitoring hopefully resulting in better performance”, he added.

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One Response to “Shrinking pension pots become cause for concern”

  1. Christopher Mannering says:

    There needs to be a level playing field for public service employees with final salary schemes and private companies’ employees who have personal pension pots.
    Some 15 to 20 years ago, a pension pot of £100,000 could buy you an annuity of around £10,000 per annum. It will now purchase an annuity of £3,500 to £4,000 pa. There should now be a pension plan to suit all and final salary / average lifetime salary related pensions should be abolished. Public sector workers are complaining about small annual pay rises but no-one makes a contra argument about the effect on public finances of funding their pensions. Someone with a salary related pension of £10,000, would need a pension pot of circa £250,000 which is impossible for anyone in the private sector earning between £20,000 and £25,000 per annum. Why is this not discussed openly and public sector workers educated to be made aware of these facts?

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