Like most things in the age of social media and viral news, the news surrounding the so-called pensions crisis in the UK has been largely exaggerated in parts. After all, the average annual pension income is set to increase by £400 by the end of 2017, while the current amount is also considerably higher than the record low of £15,300 recorded in 2013.
While the extent of the crisis may have blown a little out of proportion (the restriction of pension freedoms published in the Chancellor’s autumn statement hardly helped this state of affairs), this is not to say that the issue does not warrant attention. The current, annual pension income is still noticeably lower than the £18,700 peak recorded prior to the financial crisis in 2008, for example, while an estimated 45% of retirees feel financially unprepared to cease work.
Beyond the Data: The Key Issues and How Retirees Can Respond
As we can see, the true state of retirement saving in the UK sits between two extremes. According to the findings of a nationwide survey that canvassed the opinion of 1,000 respondents, there has been a consistent and incremental increase in retirement income levels since the global pensions crisis reached its lowest point in 2013. While this is good news, however, there is still much work to be done to ensure that retirees can live comfortably once they have stopped work, while citizens still feel as though they have to continue in gainful employment in order to live comfortably.
The current situation is being exacerbated by the prevailing economic climate, however, which is impacting on the ability of each individual to save. With real wage growth having stagnated and the cost of living rising, it is also becoming increasingly difficult to save money and commit to long-term pension funds. Many lenders have also slashed their top savings rates since the beginning of 2017, as they look to increase their profitability and prepare for the potential fall-out from Britain’s proposed EU exit.
The question that remains, of course, is how retirees or those looking to build their pension funds can cope with these restrictions? The first step is to understand the threats posed by pension restrictions and the economic climate, before seeking out expert wealth planning advice from a reputable provider like Tilney.
This will not only enable you to make informed decisions, but it also opens your mind to the number of diverse and flexible investment vehicles that exist in the digital age. Make no mistake; technology and innovation has made the financial markets far more accessible to regular citizens, and leveraging this opportunity can help retirees to optimise their returns in a volatile climate.
