Retiring Brits could be "pension paupers"
Retiring British people could find themselves becoming "pension paupers" when they end their working lives, according to a new report.
Fidelity International has revealed that the average retiree in the UK can expect to see a 53 per cent drop in their income level when they start taking their pension.
This amounts to an income below the national minimum wage and the firm behind the recent study suggests that matter could get worse as more people shift from a defined benefit (DB) to a defined contribution (DC) pension scheme.
According to Fidelity International, DC schemes are not inherently worse than their DB equivalents but many people reduce the amount they are saving for retirement after reassessing their situation.
"The move from DB to DC is often accompanied by a review of contribution levels, sometimes to the detriment of employees," said Simon Fraser, president of the Retirement Institute at Fidelity International.
"It is a shocking thought that, if this is not corrected, we could see the emergence of a generation of private pension paupers."
Meanwhile, the Tax Incentivised Savings Association has called for employers in the UK to start auto-enrolling their workers on to a pension scheme before they are obliged to do so in 2012.
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