Workers facing old age on min wage

The average UK worker is facing a retirement income less than the minimum wage, according to new figures.

A retirement index from mutual fund manager Fidelity found a typical British household will see a 60 per cent cut in income at retirement time.

Based on current trends, someone retiring on today's average annual earnings of £22,900 would have a retirement income of £9,618 or £185 per week pre-tax, less than the weekly earnings of someone on minimum wage who works 40 hours a week.

The research revealed pension savings and State benefit entitlements of UK workers will only replace 42 per cent of their expected final salary with pensioners having to find the rest.

Simon Fraser from Fidelity International said: "Unless workers, employers, the financial services industry and the government pull together to find a solution, we could have almost an entire generation of retirees living off meagre State benefits."

The figures also show a division on age as the UK's 55s are set to receive on average 58 per cent of their pre-retirement income whereas those aged 35 to 54 are looking at 44 per cent, and those under 35 will receive just 39 per cent of final earnings.

Simon Fraser added: ""People need to begin planning earlier for their retirement. Although employers should take a more responsible role in helping their employees to be prepared for retirement, it is down to the individual to think about their pension needs early to avoid poor retirement prospects."