The fund manager Fidelity has warned that the UK faces a 'two-tier' scenario of pensions provision as a growing rift emerges between those with defined contribution schemes and those on the increasingly uncommon final salary option.
Fidelity’s research suggests that the average working Briton will have to live off just 42% of their final working salary in retirement – which in many cases would equate to an annual income of below the current minimum wage.
The gulf between the retirement expectations of defined benefit (final salary) and defined contribution pension schemes is astonishing, Simon Fraser, president of institutional business at Fidelity, was quoted as saying by the BBC.
Fidelity says that Britons need to contribute more to defined contribution schemes.