Retirement Saving Sees A Reversal Of Fortune

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More people are saving for retirement now than at any time in the past 10 years, according to new research.

Just one in seven people retiring this year have no pension, compared to one in four in 2008, when financial firm the Prudential started tracking savings.

The reversal of fortunes seems to have been led by women.

In 2008, a third gave up work without any personal pension savings. Now the number has fallen to 19%.

For men, one in six retired without a private pension, while the number has dropped to 9%, or less than one in 10, this year.

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Lower expectations

This massive change in retirement saving has taken place against a backdrop of almost continually changing pension rules, the scrapping of the state retirement age and the need to save more prompted by a rise in more people living longer.

It’s worth noting that people retiring this year still expect to have a lower retirement income than those retiring a decade ago.

In 2008, the expected annual retirement income was £18,700 – that fell to £15,300 in 2013 and then started to rise again to £18,100 this year.

The decline of the final salary pension has also dented retirement expectations.

In 2008, 52% of retirees picked up a workplace pension based on their length of service and final salary. That’s dropped to 42% in 2017 and will continue to decline as most final salary schemes are now closed to new members.

State pension provides 35% of retirement income

Vince Smith-Hughes, a retirement income expert at Prudential, said: “The past 10 years have been a decade of constant change with pension freedoms, the new State Pension, the roll out of automatic enrolment and the abolition of the default retirement age to name just a few.

“The financial crisis, the subsequent recession and ongoing political change have all added to the uncertainty. However, despite all this the good news is that the message about the importance of retirement saving seems to be getting through, demonstrated by a significant increase in the numbers reaching retirement having saved for their future.”

Smith-Hughes also explained that the state pension was still an important financial factor, providing around 35% of retirement income.

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