UK pensioners will still lose 50% of their income on retirement despite the government's pension reforms designed to boost future pension saving, financial service provider Fidelity International has claimed.
Fidelity, in partnership with Towers Perrin, has calculated that the reforms will improve pension benefits for retirees – but only by around 7%, leaving a 51% shortfall. Fidelity told web magazine IFA Online that while the reforms are welcome, they will not have the impact on standards of living which people are expecting.
For a person on the average salary, the reforms, including a return to the link between pension payouts and earnings, will mean their annual income will rise to GBP11,221, or GBP215 a week. Simon Fraser, president of institutional business at Fidelity, told IFA Online: People should not be lulled into a false sense of security by these reforms. On current trends people are still facing a 50% drop in income unless they start saving more now.
However, Fidelity backed the introduction of a national pension savings scheme (NPSS), if it is done in the right way through auto-enrolment and the right investments, as it could make a difference to the 12 million workers not saving for retirement.