One in five over 50s are still relying on defined benefit pensions, but numbers are expected to decline significantly in the coming years.
New figures on this shifting retirement income landscape were provided by Standard Life via its annual Retirement Income Almanac.
According to the report, approximately 20 per cent of individuals aged over 50 either rely or plan to rely on DB pensions to fund their retirement – with these pensions constituting nearly half (44 per cent) of their retirement income.
But this research highlights the downward trend in DB pension membership, with far fewer individuals in younger age brackets having access to these schemes.
Among those surveyed, 27 per cent of over-80s and 23 per cent of over-70s rely on DB pensions, while the figure drops to 20 per cent among over-60s and just 15 per cent among over-50s.
Despite this decline, the report underscores the substantial contribution of DB pensions to retirees’ income, with over-80s reporting that 56 per cent of their income comes from these ‘ guaranteed’ pensions.
The report shows how younger retirees are increasingly diversifying their income sources. The report highlights a reliance on various financial vehicles, including state pensions, general savings and investments, workplace pension pots, and partner’s pension pots.
Notably, almost half of over-50s (46 per cent) are utilising or planning to use general savings and investments, contributing an average of 20 per cent to their overall retirement income.
The research also reflects a shift towards self-reliance in retirement planning, with a significant proportion of individuals using the equity tied up in their homes or income from investment properties.
Standard Life managing director of individual retirement Claire Altman says: “Pension planning grows increasingly complex for retirees as we continue to move away from the era of guaranteed DB pensions, with people increasingly reliant on more varied sources of income. This data also highlights the reliance on the state pension and the inherent challenges around potential changes to the state pension age. Almost three quarters of over 50’s say it makes up, or will make up, around half of their income in retirement
“For those approaching or at retirement, the focus will be on how to access their savings and make them work harder. Most people will want a degree of guaranteed income to cover essential spending but the reality is almost a third (31 per cent) of over 50s say they are unsure or don’t know how to use or plan to use their savings.
“This makes it all the more imperative to make sure we, as an industry, are helping people make the best decisions around how to manage their retirement income.”
