Pensioners issued 'fixed-income warning'

Pensioners and anyone approaching retirement have been warned that they could lose out in months and years to come if they receive a fixed income.

According to Standard Life, a fixed-income annuity can offer a degree of financial security but rises in inflation can leave pensioners with a notably diminished spending power.

The financial services firm suggests that people saving for retirement are faced with the difficult choice between a fixed-income annuity that is vulnerable to inflation pressures or an index-linked equivalent that pays out less initially but rises in relation to the cost of living.

"People approaching retirement need to make some stark decisions," said Andrew Tully, senior pensions policy manager at Standard Life.

"However, new solutions are being launched which will help address these issues by investing in the stock market and also guaranteeing an income which pays the bills."

A spokesperson for Saga Travel Money recently suggested that the rises in the cost of living currently squeezing pensioners' finances will see many moving overseas during retirement.