The average British private sector worker
saving in a defined contribution (DC) pension scheme has lost
£2,750 ($4,384) per annum of their future retirement income in the
last twelve months, according to The Alexander Forbes National
Pension Index.
Alan Carey, principal consultant, for
Alexander Forbes Consultants & Actuaries, said the UK
government’s quantitative easing programme has adversely impacted
annuity rates, which in turn has significantly hit people’s
retirement income expectations.
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Carey said: “Hopefully gilt yields, which
influence annuity rates, will recover to some extent when QE stops,
improving annuity rates and reversing the worst of the serious
deterioration in the Alexander Forbes National Pension Index over
the last year.”
Auto-enrolment contributions
According to the Alexander Forbes National
Pension Index, had the typical member invested at the government’s
proposed minimum savings rates of 8% employers’ and employees’
contributions under auto-enrolment into a pension since the
Millennium, he or she would have been on track to receive just one
third of their final salary in retirement.
Carey said: “Our National Pension Index shows
that government’s suggested minimum savings rates under auto
enrolment are inadequate to deliver a decent income in
retirement. The real risk is that people will think that the
minimum 8% savings rate is ‘approved’ in some way, leading to
people feeling badly let down when they eventually retire.”
The Alexander Forbes National Pension Index
shows the value of pension savings for the typical worker saving in
an employers’ defined contribution (DC) pension scheme as an index
figure. It compares the typical worker’s pension expectations today
with their pension expectations in the year 2000.
