UK- The number of people facing retirement hardship in the UK has increased by an average of one million a year since 1996, according to JP Morgan Fleming Asset Management.
Results, compiled from surveys and data provided by government agencies, employer organisations and research companies, revealed that around 16 million people – around 54% of the working population – will have a pension income of less than 40% of their final salary. This represents an increase of 3.5 million people on last year’s figures.
Just 29% of the working adult population in the UK is expected to have a comfortable retirement (pension provisions of 50% or more of their final salary).
According to JP Morgan Fleming’s ‘Pension Map of Britain 2002’, those worst hit will be from the South West and the North of England with 72% and 68% of their working population facing hardship in retirement.
The East Midlands and Northern Ireland fared best with only 44% of the working population falling into this category. The biggest one-year increase in people facing retirement hardship occurred in Greater London. Now 50% of Londoners face a difficult retirement.
“The main factors attributable to the increase include: falling equity markets, falling annuity rates, the change in the tax treatment of pension funds and more erratic working patterns”, explains Julian Lyne, relationship manager at JP Morgan Fleming.
Data conflicts somewhat with the report out in August from the Trades Union Congress’ (TUC), the body representing more than 7 million UK workers, which claims pensions coverage to be lower in the North East, Yorkshire, Humberside, the East Midlands and Wales, and highest in London and the South East.
Last week the TUC reported that for Welsh workers, the pension schemes that employers are using to replace final salary schemes will only provide a decent pension to employees who start saving at 20, retire at 65 and don’t miss any contributions throughout their working lives.