Pensions make up less than two-fifths of income in retirement

Our research shows that pension savings make up less than two-fifths of retirement income on average and that drops to less than a third for single pensioners.

Our analysis of latest Government data shows average incomes before tax are around £30,570 for pensioners rising to £41,130 for couples and dropping to £20,120 for single pensioners.

However just 36% of the income before tax – around £11,100 – is provided by pension saving whether it is from occupational or personal pensions. Benefits including the State Pension make up a bigger proportion of incomes at 44%, our analysis shows.

Investment income contributes just over £2,100 year to average incomes while earnings on average amount to more then £3,800 a year across all retired people.

For retired couples pension income accounts for nearly 39% of their total pre-tax income with benefits accounting for 38%. Investment income contributes 7% and earnings around 16%. For single retired people our pensions account for 31% of income with benefits responsible for nearly 56% of income. Investments chip in just 6% and earnings 7%.

Our analysis shows nearly all (97%) of retired people receive the State Pension while 71% have private pension income. Around one in seven (14%) have earnings from work while 58% have some investment income.

Our service, iSIPP, enables customers to sign up easily at www.isipp.co.uk and also offers regular and ad-hoc contributions. Our service is particularly suited to the self-employed and contractors or those who have become self-employed recently as they can combine all their existing pensions.

iSIPP Managing Director Hrishi Kulkarni said: “Private pensions make a major contribution to income in retirement with more than 70% of retired people having some income from retirement savings either through an employer or private pensions.

“However, it is instructive to find that pensions only provide 36% of income in retirement with benefits including the State Pension accounting for a higher proportion of retirement income.

“Increasing saving for retirement can have a major impact on how comfortable people are when they stop work and that should also include keeping on top of pension savings you no longer contribute to. Consolidating them into one fund can help reduce fees and potentially improve their performance.”

Our free to set up service has no dealing charges or charges to transfer in existing pension funds and enables clients to create their own investment portfolio complementing our existing ‘Choice’ range of Ready-Made funds from world-leading fund managers BlackRock and Schroders.

Our digital pension consolidation service is available to all customers with UK pension funds who are working or have worked in the UK. Built around flexibility, we provide access to over 100 funds under our ‘Create’ option allowing users to build their own portfolio. Our ‘Choice’ range include Ready-Made Portfolios from world-leading fund managers BlackRock and Schroders. BlackRock’s multi-asset, risk-managed MyMap range of funds are available which include an ESG fund and we also provide access to the Schroders’s Shariah compliant fund. Focusing on transparency, our annual trust fee is £200 plus a 0.25% platform services fee. Funds with OCF (Ongoing Charges Figure) start at as low as 0.16%.

Disclaimer 

The content of this article is for general information purposes only and should not be construed as legal, financial or taxation advice. You should not rely on the information contained in this article as legal, financial or taxation advice. The content of this article is based on information currently available to us, and the current laws in force in the UK. The content does not take account of individual circumstances and may not reflect recent changes in the law since the date it was created. It is essential that detailed financial and tax advice should be sought in both jurisdictions and any legal advice, if required.

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