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Expected
Retirement
Incomes Hit
Five-Year Low
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People retiring in 2012 expect to live on an average annual
income of £15,500 - over £1,000 a year less (six per cent)
than those who retired in 2011. The figures come from
Prudential's unique Class of 2012 research which provides
insights into the financial expectations of Britons planning
to retire in the next 12 months.
The results of Prudential's annual survey, first carried out
in 2008, show that expected annual retirement incomes have
dropped by more than 16 per cent in the last five years. The
Class of 2008 retirees looked forward to a total annual
income, including private, company and State pensions, of
approximately £18,600 - £3,100 a year more than those
planning to retire this year.
In a sign of the ongoing financial challenges facing those
due to retire in 2012, one in five will get by on an
expected annual income of less than £10,000. Meanwhile,
around the country there is a regional disparity of more
than £5,000 in expected retirement income. Londoners have
the highest average expected incomes of £17,900, while those
in Yorkshire and Humberside have the lowest at £12,800.
Fewer than two in five (37 per cent) of the Class of 2012
say that they have saved enough to secure a comfortable
retirement.
Gender
difference
Men are more optimistic about their retirement than women,
with 45 per cent of men confident they will be financially
comfortable compared with 31 per cent of women. However,
nearly one in five (18 per cent) of those planning to retire
in 2012 have no idea of the level of income they will need
in order to live comfortably.
Vince Smith-Hughes, Prudential's retirement income expert,
said: "The
current economic climate has created the perfect storm for
people in the run up to retirement. The impact of the credit
crunch, banking crisis, recession, and concerns over the
Eurozone, has been reflected in the fact that expected
retirement income levels have hit a five-year-low.
"It is concerning that expected retirement incomes are going
down, while pensioner expenditure is going up. However,
there are some practical steps that workers and imminent
retirees can take to ensure a more comfortable retirement.
For those who are still working, it has never been a more
important time to save into a pension. The longer that
savings are invested in a retirement pot, the greater the
opportunity they will have to grow.
"However, even those due to retire this year could make
their retirement funds generate better incomes. Consulting a
professional financial adviser can help savers to make more
informed pension saving and retirement income decisions."
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Britons Plan
To Spend
£22.1 Billion On Holiday
Escapes In 2012
New research from Sainsbury's Travel Insurance suggests that
in 2012, 28.9 million Brits plan to spend £22.1 billion on
holiday escapes. On average those planning to book a holiday
in 2012 say they will spend £765 on the cost of their
holiday alone.
The research also reveals that budget savvy Brits are
actively seeking ways to cut the cost with more than three
quarters (78%) of those taking a holiday in 2012 saying they
intend to cut costs and spend less than in previous years.
Of the 45% planning a foreign holiday; 13% plan to stay with
family and friends abroad, 12% say they will book a
self-catering break, 10% are looking at all-inclusive
holidays, and 17% will stay in a hotel.
There appears to be a shift in the timing of when people
will book their holiday, as just 6.8 million people planned
to do this by the end of February 2012, compared to 13.4
million people in the same period last year. 23% plan to
book holidays later in the year (between March and June) and
10% plan to book theirs between July and September, however
a well-organised 16% of Britons said they've already booked
a holiday for 2012.
"It appears that more people will delay booking their
holiday this year, presumably hoping to secure a better deal
and the majority of us are aiming to reduce our spending
money too. We would also encourage holidaymakers to
carefully consider their travel money and travel insurance
and shop around for the best value for money without
forfeiting quality."
David added: "Good quality travel insurance will give you
peace of mind that your possessions, holiday costs and
healthcare needs are covered in the event of unexpected
mishaps. Also, organising your travel money before you go
means that you have one less thing to worry about, and are
fully prepared when you reach your destination."
Of those planning a holiday in the UK; 36% intend taking a
self-catering holiday, 28% intend staying with family and
friends, 28% plan a camping or caravanning holiday and 14%
intend to take a driving holiday in this country. Some 39%
intend to stay in a hotel in the UK.
Sainsbury's multi-trip travel insurance offers:
- Up to 25% discount when you apply online(3)
- Take any number of trips per year - up to 60 days per trip
- Travel disruption cover, which includes scheduled airline
failure cover, is included with the Standard option of a
Sainsbury's Travel Insurance policy(2).
- Tailor your medical care to meet your needs.
To obtain a Sainsbury's Travel Insurance quote you can log
onto www.sainsburysfinance.co.uk or call 0800 316 1452.
Lines are open 8am - 8pm Monday to Friday, 8am - 7pm
Saturday, and 9am - 5pm on Sunday.
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Survey Shows That Only
33% Of Homeowners Know
That Free Solar Is Available
Under Government Scheme
Homeowners, schools, businesses and charities across
the South East who are interested in going
green have only a month left to potentially benefit
from free solar energy according to leading solar
energy firm Freetricity.
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CEO of Freetricity, Paul Williams said:
“In a recent survey of 3000 people we found that 67%
were not even aware that they could benefit from a
free solar energy system and free electricity as
part of the Government’s Feed in Tariff scheme.
Last week’s announcement by the Government confirms
that we now have only a month left to install solar
panels at the original higher tariff rate.
After that point, the future of free solar is far
from certain.
“We know there is demand there - we are currently
receiving up to 10,000 enquiries a week from
homeowners keen to sign up and save money on their
electricity bills.
“The free solar option is ideal for homeowners and
community organisations because there are no costs
involved for them. We have fitted hundreds of
systems for homeowners and already started fitting
solar on schools and churches who are keen to sign
up with us because the offer is completely free to
building owners.
"It will be especially attractive to those who are
interested in reducing their carbon footprint but
concerned about cost. This deal will allow them to
see that solar is a genuinely viable alternative to
traditional energy sources.”
“If a homeowner wants to pay for a solar system,
they will receive the Feed In Tariff payment as well
as free electricity. The pay back on this sort
of system is at around 10-12% or eight to ten years
depending on system size and location.”
If you are interested
in installing solar panels
Then visit
www.freetricityplc.com. to
find out more. Applications are accepted on a first
come first served basis.
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Rise of the 'Wearies': More Pensioners
Working In
Their 70s
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Growing numbers of
pensioners will be forced to take part-time and
consultancy work into their 70s because they cannot
afford to retire, a think tank has warned.
Pensioners will be turned into 'Wearies' - Working,
Entrepreneurial and Active Retirees - because of the
downturn, according to Future Foundation. Photo:
ALAMY
A new generation of “Wearies” – Working,
Entrepreneurial and Active Retirees – is being
created as they work into their 70s and beyond due
to the pensions crisis, it is claimed.
Researchers said the development will result in the
traditional image of pensioners relaxing in old age
being transformed because many people can no longer
afford to put their feet up.
According to figures, more than half of those who
have already retired said they would be prepared to
do part-time work to boost their pensions.
But that figure jumps to three-quarters among those
who are yet to retire. The disclosure – in a study
by the think-tank Future Foundation – comes amid
growing fears that pensioners are struggling to make
ends meet in the downturn.
The cost of living for pensioners is rising faster
than for the rest of the population as they spend a
greater proportion of their income on food and fuel
– where prices are rising fastest.
Pensioners have also seen their income from savings
sharply reduced because of low interest rates.
It is believed the situation will get worse for
future pensioners because of a squeeze on public
sector pensions combined with a decision by many
private sector companies to close final salary
schemes.
Martin Palmer, head of corporate benefits marketing
at Friends Life, who commissioned the study, said:
"We're expecting the traditional image of the
pensioner with slippers and rocking chair to change
completely.
"Many will not have saved adequately for a secure
retirement and, with years of fiscal austerity
taking their toll, by 2020 many people in their 70s
simply will not be able to afford to give up
working.
"Necessity is the mother of invention and 'Wearies'
will be among the most innovative and
entrepreneurial contributors to the UK economy,
despite their senior years."
Almost 1,000 people aged over 18 were asked about
their attitude to working in retirement as part of
the study – “Pensions: Crisis and Reforms”.
According to the report, 51 per cent of those who
are already retired said they would be prepared to
do part-time work to boost their pensions, with
numbers rising to 75 per cent among those yet to
retire.
Many of tomorrow’s OAPs will look to supplement
their retirement savings by become self-employed in
their later years, it was revealed.
The study said many are likely to supplement their
income buying and selling goods on websites like
eBay, while others will turn their front rooms into
offices or cottage industry workshops or a nursery.
Those with manual skills might set up gardening or
home help businesses to make money helping
neighbours, academics predicted.
A total of 59 per cent said they would run "a small,
one-person business from home" and 21 per cent would
consider gardening for elderly neighbours or for the
local council.
One third said they would rent out a spare room to a
lodger, and 14 per cent said they would think about
moving in with other family members.
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Don’t Get Stung For
Emergency Home Repairs
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The big freeze last year cost homeowners a fortune
in emergency repairs and the UK is on high alert in
case it happens again this winter. Leading insurer
and assistance provider Europ Assistance warns:
Although home insurance may cover plumbing or
drainage-related damage to carpets and furniture, as
well as storm damage to a roof, it may not cover the
cost of rectifying the actual cause of the damage.
Last year a common problem caused by the extreme
weather was burst pipes. A burst pipe itself is not
usually covered by a standard home insurance policy,
even though the damage caused by the leak is. You
may also have to pay an excess on any damage claim.
The cost of calling out a plumber to fix problems as
they occur can be astronomical, especially over busy
periods when contractors tend to charge more. 2011
evidence from What Price, the online price sharing
community, shows that on average emergency callouts
come to £123. Repairing burst and leaking pipes
costs £236 and if your boiler breaks down you will
be left with a bill for £244.
Home emergency assistance packages typically cost
less than the excess on your buildings or contents
insurance, which you would have to pay if problems
such as burst pipes were left unchecked. Policies
cover the callout fee, labour and materials. All you
have to do is confirm the job has been completed
satisfactorily and the insurer covers the cost of
the emergency repair.Don’t get stung for emergency
home repairs this festive period, make sure you are
covered. Find out more about emergency home
assistance and get a quote at
www.europ-assistance.co.uk.
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Annuity income falls for
fourth consecutive year
Research from Investment Life and
Pensions Moneyfacts has shown that 2011 was another
poor year for annuity rates, with annuity income
falling for a fourth consecutive year. Over the
course of 2011 the average income generated by a
standard level without guarantee annuity (based on a
£10K purchase price) fell by 8.4% for a 65-year-old
male and 7.7% for an equivalent female (see
Table 1).
Table 1: Average and top pension annuity income at
the age of 65 during 2011
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Male age 65
Average Annuity
|
Female age 65 Average Annuity |
Male age 65 Highest Annuity
|
Female age 65 Highest Annuity
|
|
Jan 2011 |
£607 |
£568
|
£647 |
£608 |
|
Feb 2011
|
£
615 |
£575
|
£654 |
£608 |
|
March 2011
|
£617
|
£577
|
£651 |
£613 |
|
April 2011 |
£622
|
£582
|
£654 |
£610 |
|
May 2011 |
£629
|
£589
|
£654 |
£610 |
|
June 2011 |
£622
|
£585
|
£652 |
£612 |
|
July 2011 |
£612
|
£579
|
£636 |
£609 |
|
Augt 2011 |
£611
|
£579
|
£641 |
£609 |
|
Sept 2011 |
£595 |
£558
|
£620 |
£579 |
|
October 2011 |
£584 |
£548
|
£613 |
£576 |
|
November 2011 |
£570 |
£537 |
£602
|
£570 |
|
December 2011
|
£559 |
£527 |
£602 |
£561 |
|
January 2012
|
£556 |
£524 |
£593 |
£558 |
|
One year change |
-8.4% |
- 7.7% |
- 8.3% |
-8.2% |
Annuity figures show gross annual annuity payable
monthly in advance. Figures are based on a £10K
purchase price for a standard level without
guarantee annuity.
As a result, average annuity income
has now fallen in each of the calendar years from
2008 to 2012. The last time that annuity income
actually increased during a calendar year was 2007,
when annuity payouts rose by 4.4% (see
Table 2).
The market-leading rates available through the
course of the year suffered a similar fate to the
trend endured by the average rates. Back in January
2011 the top standard level without guarantee
annuity rate for a male aged 65 (based on a £10K
purchase price) was £647 per annum.
Table 2: Average annual change in pension annuity
income by calendar year
Figures are based on a male aged 65 purchasing a
standard level without guarantee annuity (£10K
purchase price).
|
Calendar year
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Average annual change in annuity income |
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2000
|
-0.8% |
|
2001
|
-6% |
|
2002
|
-11.1% |
|
2003
|
-2.3% |
|
2004
|
-2.5% |
|
2005
|
-3% |
|
2006
|
1.3% |
|
2007
|
4.4% |
|
2008
|
-2.2% |
|
2009
|
-8.7% |
|
2010
|
-2.7% |
|
2011
|
-8.4% |
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