UK workers face bleak pension outlook says PWC
UK - Young workers face a bleak pension outlook unless they start saving more or retire later, accounting and consulting firm PricewaterhouseCoopers (PWC) says.
A report forecasts that for a male with an unbroken work record, his pension contributions would need to double from current UK average levels of earnings in order to deliver a total pension (including a state pension) of two-thirds of final salary at 65.
"Aside from working longer, the only other way for young people to build up an adequate pension is to save more, but our calculations suggest that the gap to be filled is a large one," says John Hawksworth, head of macroeconomics at PWC.
The situation is even worse for women as they may take a break from their careers to look after children. PWC says they face a 'triple whammy' from lost earnings (and pension contributions) during career breaks, a probable lower income level on return to work and a lower annuity rate on retirement.
For a woman on average earnings in her twenties, her private pension on retirement may be only 60% of that of a male counterpart with the same initial earnings, but with an unbroken career record.
Hawksworth adds: "This is a tough target to meet at a time when employers are reducing their contributions and low asset returns make people reluctant to save more. But these are precisely the factors that mean that such additional savings is now more necessary than ever."
Retiring later could help. PWC estimates that retiring at 70 instead of 65 could boost a man's total pension income by a third. In contrast, early retirement at 55 instead of 65 could reduce his pension by half.
The research combined private and state pension entitlements for a range of hypothetical case studies of men and women born in 1980 and due to receive their state pension in 2045.