Reality Of Poor Pension Provision Hits Millions Of Uk Pensioners When Pay Cheques Stop

REALITY OF POOR PENSION PROVISION HITS MILLIONS OF UK PENSIONERS WHEN PAY CHEQUES STOP · One in five (18%) of UK pensioners are caught out by sudden drop in income; · 80% of the nation's retired have seen their monthly income drop by an average of £347 since leaving full-time employment; · Retirement income for women is around 19% lower than for men; · Over 50% of pensioners make cutbacks on 'essentials' in retirement to make ends meet; · One in five retired people (21%) can't meet their financial commitments due to lack of cash. The debate on pension provision hots up Latest research from Prudential's quarterly Retirement Index reveals that 1 in 5 pensioners have been over optimistic about how much money they will have to live on when retiring. This means that many of the 569,900 UK pensioners retiring this year are in for a shock and may have to drastically cut their household budget in order to make ends meet. Struggling pensioners have seen their annual disposable income fall by an average £4,164 since leaving full-time employment. This could be worse news for a couple - who could see their annual income fall by over £8,000. With over 607,000 people due to retire in 2003 and nearly 629,000 in 2004, the 'retirement trap' will only get bigger. Shock fall in income As a result of plummeting income and a third of retired people struggling to survive on less than £10,000 a year, UK pensioners have cut back on general household expenditure. Even though pensioners are having to make cutbacks, nearly one in five (18%) experienced a higher drop in income than expected after leaving employment. Cont... How pensioners are hit Drop in monthly income since retirement per person, per region Region UK North South South West Greater Average West West East Midlands London Average drop in £347 £391 £365 £398 £293 £351 monthly income Wales Scotland East Yorks/H. East North Midlands side Anglia East £229 £357 £518 £261 £373 £234 Source: Prudential Retirement Index - Q2, April 2002. Big difference in men and women's pension income The discrepancy between male and female retirement income remains with women living on 19% less than men. According to Prudential's latest research, the difference between the average annual disposable male income in retirement and the average annual disposable female income is £3,050. Gary Hitchens, Director of the Customer Channel at Prudential said: "This is a stark lesson for today's working population when planning for a comfortable retirement. Only 15% of those questioned ensured no drop in income due to planning well in advance, or saving into a personal or company pension scheme. Pension providers and the government have been telling people they have to act now, and our research clearly shows that leaving it too late is storing up trouble for the future." Leaving it to chance just won't work Of those who didn't experience a drop in income, not a single pensioner said it was more 'luck than judgement'. Just over a third (33%) had good investments or savings plans and over a quarter (26%) took advantage of a company pension or paid into a personal pension. Regional pensioners are struggling to pay the bills Percentage of pensioners who feel their household income is too low to meet all their financial commitments. Comparing April to January, by region. Region UK Average North South South East West Greater West West Midlands London April 21% 24% 18% 19% 19% 21% (+4%) (+6%) (+8%) (+1%) (+8%) (-3%) Wales Scotland East Yorks/H.side East North East Midlands Anglia 25% 26% 20% 22% 15% 27% (+12) (+20%) (+7%) (+6%) (-5%) (+2%) Figures in brackets show (+/-) since January 2002. Source: Prudential Retirement Index - Q2, April 2002. The 'Retirement Trap' cutbacks The % of people cutting back on the following basics in retirement: Clothing 62% Leisure activities 59% Holidays 57% Eating Out 56% Public 46% Telephone bills 38% transport/running a car House maintenance 37% Food and drink 35% Heating bills 33% Health/medication 18% Source: Prudential Retirement Index - Q2, April 2002. Hitchens concluded, "Retirement should be a period in life when people can enjoy the luxuries and leisure activities they would not have had time for when working. Our research clearly shows that people are not putting aside for this and find themselves cutting back on general expenditure instead." For further information from Prudential on saving for retirement customers can call freephone number 0800 316 2022. -Ends- Notes to Editors: 1. Prudential questioned 439 retired adults from 5th - 11th April 2002. 2. Number of people reaching retirement age each year (65 for men, 60 for women). Based on estimated resident population by single year of age and gender. Source: Office of National Statistics. Year Male Female Total 2000 253,600 291,700 545.300 2001 261,800 276,800 538,600 2002 270,000 299,900 569,900 2003 278,300 328,800 607,100 2004 282,600 346,300 628,900 2005 282,800 345,200 628,000 For further information, case studies or interviews with Gary Hitchens contact Prudential Press Office: James Murray 020 7334 6363/07810 1817575 or email james.murray@prudential.co.uk Tracey Pinon 020 7334 4319/07855 356717 or e-mail tracey.pinon@prudential.co.uk Paul Keeble 020 7334 5121/07904 081250 or email paul.keeble@prudential.co.uk ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2002/05/21/20020521BIT01160/wkr0001.doc http://www.waymaker.net/bitonline/2002/05/21/20020521BIT01160/wkr0002.pdf