BRITAIN'S PENSIONS SLUMP TO LOWEST IN EUROPE; Pension Slump
Byline: James Salmon
BRITONS are the pensions paupers of Europe and need to put away an extra [pounds sterling]10,300 each every year in order to achieve a comfortable retirement.
The country's 31million savers will have to pay an extra [pounds sterling]317.5billion in to pension pots over the next 40 years - more than residents of any of our European neighbours - or face a poor retirement.
Germans are the second worst off, facing a shortfall of [pounds sterling]9,700 per person, according to a report for insurer Aviva.
Yet savers in Hungary have an average shortfall of only [pounds sterling]1,600.
Experts say UK savers are paying the price for a toxic combination of meagre state pension, huge cutbacks in company pensions and record low pension payouts. Dr Ros Altmann, of the London School of Economics, said: 'The UK has the meanest state pension in the Western world.
'Private pensions have been hammered by falling markets, generous company pension schemes have been cut back and people are living longer.
'Unless there is radical change, a larger proportion of people will be retiring in poverty.'
Less than a third of the UK's workforce of 29million are saving into a company pension scheme and firms which do offer pensions are scaling back their benefits.
The average private sector worker receives pensions contributions from their employer worth only [pounds sterling]14 per week, compared with [pounds sterling]76 per week for their public sector counterparts.
Generous final salary pensions are also dying out in the private sector, dropping from 4.9million members in 1995 to only 1.1million today.
Pension payouts have reached record lows, with the same fund paying half the income it would have done 15 years ago. The average pensions pot for someone retiring today is [pounds sterling]25,000, which would pay an annual income of only [pounds sterling]1,560. Those due to retire in the next five years face the biggest challenge as they have less time to plug their shortfall.
Toby Strauss, chief executive of Aviva UK Life, said: 'These figures should be a wake-up call for individuals and governments across Europe, particularly in the UK.'
Some experts believe workers need to be more realistic about their standard of living in retirement. Dr Altmann said: 'More and more people will be living for 30 or 40 years in retirement and cannot expect to maintain the standard of living they have when they are working. …