The average income of people retiring in
the UK in 2017 is £18,100, according to research by
Prudential. While this has increased for the last four years it
remains £600 below the level of 2008.
The UK has undergone substantial pensions
reform in recent years, including auto-enrolment into schemes
and the liberalising pensions freedoms, which has passed more
responsibility to the individual.
Vince Smith-Hughes, retirement income
expert at Prudential, said: "In the UK the risk and
responsibility for retirement provision continues
to transfer away from the state and companies to
individuals. At the same time the pension freedoms are
providing people with a whole new raft of options around taking
an income in retirement."
The research found that nearly half (45%)
of people planning to retire in 2017 feel they are either not
financially well prepared for retirement or are unsure about
"As well having a responsibility to
develop products that reflect this new reality, providers such
as Prudential also need to take an active role in educating and
guiding savers through both the longevity and investment risks
they now potentially face."
Pension incomes hit a peak of
£18,700 in 2008 but declined steadily to a nadir of
£15,300 in 2013 due to a combination of poor investment
performance and low annuity rates as a result of quantitative
"I think that the demand for risk-managed
investments to fund retirement will rise as people face up to
the joint challenges of ensuring that they don’t
outlive their savings while needing to take an income from
their investments in the face of volatile markets."
"We have seen increased demand –
through a range of investment and tax wrappers including ISAs,
pensions and bonds – for our PruFund of funds, which
offer smoothed returns and protection against volatility."
media activity repeats the messages that people should save
more and consult a financial advisor, according to
Kirsty Anderson, a retirement income
expert at Prudential, added: "We are also seeing a degree of
uncertainty from retirees about whether the amount
they’ve saved will leave them financially prepared
for the years ahead.
"For many people, the value of a
consultation with a professional financial adviser, both when
saving into a pension and when considering the income options
at retirement, should not be underestimated."