For many people, pension funds are just too small to buy the best UK annuity rates, and there has been a warning over private pension fund values. Around 75% of Britons are retiring on incomes of only £2,000 a year, or less, from their private pensions, recent research has shown. 90% of people who retired between 2004 and 2009 had accrued a pension fund worth less than £50,000, while around 77% had saved less than £30,000, according to enhanced annuity specialist Partnership. The group said at current annuity rates, a pension fund of £30,000 would convert into an annual income of just about £2,000 a year.
Even once the state pension is included, single people will still have a retirement income of just about £7,000 a year, while couples will receive around about £10,100. In both cases this is significantly less than the current level of average earnings which is around £26,000. The group warned that one in four retirees currently lives in poverty, and the situation could get even worse unless people start saving more money for their retirement. Philip Brown, of Partnership, said that the figures demonstrate that people are not investing anywhere near enough for their retirement years. The data reveals that barely 10% of people have a non-state pension fund of over £50,000 to buy the best annuity rates with.
He added that with well over two-thirds of all of those in the post-50 age banding having less than £30,000 in an annuity, which at today’s annuity rates would typically give an annual income of just about £2,000 a year, or £40 a week, the burden on an already heavily stretched state is going to be pretty massive. The group also found that only 38% of people were taking advantage of the open market option when they bought an annuity. The open market option enables people to buy an annuity anywhere, meaning they can shop around for the best UK annuity rates.
