Pension savings make up less than two-fifths of retirement income on average and that drops to less than a third for single pensioners, according to pension provider iSIPP shows.
According to a recent analysis of government data, the average pre-tax income for retirees is around £30,570, rising to £41,130 for couples and falling to £20,120 for pensioners who are single. However, according to iSIPP’s research, just 36 per cent of this pre-tax income, or around £11,100, comes from pension funds, whilst 44 per cent of pensioners’ income comes from benefits like the state pension.
Average retiree salaries are boosted by investment income to the tune of almost £2,100 annually, while annual earnings for all retirees are over £3,800. Retirement income for married couples is over 39 per cent of their total pre-tax income, followed by benefits at 38 per cent, investment income at 7 per cent, and earnings at 16 per cent. Retirement income for single retirees is made up of 31 per cent from pensions, 56 per cent from benefits, 6 per cent from assets, and 7 per cent from earnings.
The analysis by iSIPP reveals that 97 per cent of retirees receive the State Pension, 71 per cent have private pension income, around 14 per cent still earn from work, and 58 per cent have some form of investment income.
iSIPP managing director Hrishi Kulkarni says: “Private pensions make a major contribution to income in retirement with more than 70 per cent of retired people having some income from retirement savings either through an employer or private pensions.
“However, it is instructive to find out that pensions only provide 36 per cent of income in retirement with benefits including the State Pension accounting for a higher proportion of retirement income.
“Increasing saving for retirement can have a major impact on how comfortable people are when they stop work and that should also include keeping on top of pension savings you no longer contribute to. Consolidating them into one fund can help reduce fees and potentially improve their performance.”
