Private pension income will 'not be enough'

In an 85-page report, entitled Retirement Income and Assets: Do pensioners have sufficient income to meet their needs?, the PPI revealed even average to high earners it surveyed had a pension income that was unable to match their wage packet before exiting the workplace.

The research showed pensioners who earned median to high levels during their working lives and had complete private or occupational pension savings records could find it easier to meet many of their needs in retirement from income alone.

Pensioners who found it easier to maintain similar consumption levels in retirement to those when they worked had a combination of assets and savings to use in retirement as well as income from state and private pensions, the institute found. It stated pensioners may find it easier to meet changes in needs and expenditure preferences if they conserved their income during some of the years of retirement and spent more than their average yearly income during others.

Niki Cleal, director of the PPI, said: "Pensioners may not have sufficient resources to meet all of their extra needs in later life, such as to meet the additional costs of disability, widowhood or the need for long-term care and to maintain their desired standard of living.

"This research shows that pensioners will need a range of assets and sources of income to help them cope with the uncertainty and extra costs they may face later in their life as a result of the onset of disability, widowhood or long-term care."

Amanda Davidson, director of London-based IFA Baigrie Davies, said: "It is going to be a problem in the future and people will have to save lots more money.

"People may have to retire later, in their 70s, so that they can build resources and take into account the things that the report states. You need to save lots more to replace modest incomes these days."