Savers are continuing to see their future retirement incomes suffer – with pension funds and annuity rates still well below their pre-pandemic levels.
The latest Moneyfacts UK Personal Pension Trends Treasury Report shows that in the first quarter of this year, the average annual standard annuity income for a 65-year-old (based on a single life £10,000 level without guarantee annuity) fell by 6% – and was 1.7% lower than the previous lowest level recorded in October 2019.
During the same period, the value of the average pension fund dropped by 15.2%, the worst quarterly performance on record.
Many popular ABI pension fund sectors, says Moneyfacts, posted even heavier losses: the pension funds hit the hardest were UK Smaller Companies (-31%), UK All Companies (-29.8%) and UK Equity Income (-28.4%).
Just 11% of pension funds avoided losses during the first three months of 2020.
Commenting, Richard Eagling, head of pensions at Moneyfacts, said: “Whether it is individuals saving into a pension scheme or currently in drawdown, or retirees looking for the security of an annuity, the Coronavirus pandemic has had a devastating impact on potential retirement outcomes.
“The hope is that these will prove to be short-term shocks, but for those planning for retirement now and looking for a retirement income immediately, they present unenviable challenges. UK pension policy has increasingly moved towards placing more onus on individuals to take personal ownership of their retirement finances in recent years and take on the risks associated with this, but unfortunately recent events have shown how vulnerable they can be to major world events.”
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