Britons are being asked to look into what retirement savings improvements they may make ‘right now.’
PENSION SAVINGS have had a difficult 18 months, but new data provides reason for optimism.
According to Moneyfacts.co.uk, a financial product comparison website, retirement income has stabilized and increased after a sharp drop last year.
Following an 11.9 percent decline last year, retirement income has increased by an average of 21.2 percent this year, more than compensating for the instability of the previous year.
“Consumers’ plans for putting money into their pension may have been disturbed by the Coronavirus outbreak, so it’s encouraging to see positive returns on most fund sectors during the last quarter,” said Rachel Springall, finance expert at Moneyfacts.co.uk.
The figures were calculated using the returns that would accrue if someone deposited £100 per month into their pension for 20 years and then purchased an annuity at the age of 65.
According to Ms Springall, as of the second quarter of 2020, such an investment would have resulted in a pension account of £46,318 after 20 years, which could be used to buy an annuity paying £1,875.
This increased in the second quarter of this year, since the identical investment now yields a pension pool of £53,378, which may be used to purchase a £2,273 annuity.
“There has been a considerable improvement in the average retirement income for Q2 2021 due to a mix of pension fund growth and annuity rate increases,” she said.
This is especially encouraging news in light of reports that the triple lock could be discontinued or worsened, resulting in a real-terms reduction in state pension income.
In the second quarter of this year, the top three performing pension sectors were UK smaller firms, which increased by 9.5 percent, North American stocks, which grew by 7.8 percent, and property, which climbed by 7.5 percent.
“Seeking guidance to stay on top of stock market volatility is always a good idea, but so is discussing any concerns about having enough money for a decent retirement and the product options available,” Ms Springall added.
She noted a recent LV= research that revealed British pension savers have a disturbing lack of knowledge about the products available to them.
Over a third of pension holders are unaware of product possibilities after retirement, and the same number are unaware of the impact of stock market decreases on pensions, according to the study.
“Making a hasty decision to move funds without competent guidance during an uncertain era could result,” she warned. Brinkwire Summary News