New data from the Department for Work and Pensions shows a sharp dip in the average weekly income from occupational pensions – down to £181 in 2018-19 from £199 in 2016-17 – for those who have reached State Pension Age (SPA).
The fall in part reflects the steadily reducing numbers of people retiring with defined benefit pensions.
The longer-term measure also shows a marked reduction in income from personal pensions received by those who have reached SPA: down a massive 43 per cent, from £30 per week in 2016-17 to a meagre £17 in 2018-19.
Those who have not reached SPA fared rather better: a 7 per cent rise in weekly occupational pension income from £151 in 2016-17, up to an average of £163 in 2018-19. However, those drawing down their personal pensions early saw a dip from £21 a week to £19
Alistair McQueen, head of savings & retirement at Aviva, commenting in FT Adviser, said: “While income from the state has held up, there has been a fall in income from pensions and from earnings.
“The fall in income from private pensions will have been contributed to by the decline of generous defined benefit pensions, and the rise of defined contribution pensions.”
He also sounded out a warning for those heading into retirement and relying upon Automatic Enrolment to secure their retirement income.
“Automatic enrolment has successfully introduced millions to pension savings. But at a typical contribution rate of just 8 per cent, many may be on track to a private pension income that represents a fraction of those incomes that were provided by yesterday’s defined benefit pensions.”
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