Nov 16 2006
Recently announced research has claimed that proposals to increase the retirement age and restore the link between pensions and earnings will not be sufficient to prevent pensioners suffering an income shortfall in retirement.
Fidelity International calculates that that the reforms outlined in the pensions bill, formally unveiled in yesterday's Queen speech, will improve income at retirement by around seven per cent.
At present, the investment firm reports that the income of the average UK household drops by almost 60 per cent upon retirement.
Simon Fraser, president of the institutional business at Fidelity International, said: "People should not be lulled into a false sense of security by these reforms. Obviously they are welcome, but for the typical household it will not have the impact on their standard of living in retirement that people are expecting."
He added that this was especially true considering that reforms would not be introduced till 2012, with a further six years elapsing before improvement would be detected.
The company urged those looking for a comfortable retirement to save greater amounts of money as early as possible, noting the improved return on investments in retirement for early savers.
Steven Cameron, head of business regulation at Aegon, welcomed the pensions bill as a "step in the right direction", but also said that the proposed reforms were not radical enough.
