Personal PensionMay 25 2016

Annual cost of being a pensioner is £11,620

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Annual cost of being a pensioner is £11,620

The average annual cost of being a pensioner amounts to £11,620 a year, according to analysis by provider Key Retirement.

Food, clothes, travel and heating all constitute a weekly £223 per head bill, analysis of government figures on household expenditure shows.

This is around £3.75 per cent up on last year for the UK as a whole, the equivalent of £420 a year or £8 a week - but the average cost has fallen in Northern Ireland and the West Midlands and is virtually unchanged in London and the south east.

According to Key Retirement, the annual average for the country as a whole conceals huge regional variations with retired people in Wales needing £9,990 a year compared to £13,270 in the south east - around £3,280 a year less or 25 per cent lower.

Analysis by the firm shows the average retired household spends around 14 per cent of their cash on fuel and housing - which equates to around £1,630 a year, narrowly ahead of the 13 per cent that goes on food and non-alcoholic drinks, equivalent to around £1,560.

Dean Mirfin, technical director at Key Retirement said: “The basic cost of being a pensioner at around £11,620 a year underlines the need for extra income, which is well in excess of the basic state pension.

“For many this much needed boost can be adequately provided from the wealth in their homes.”

Pension costs across the UK


REGION

THE ANNUAL COST

2016

THE ANNUAL COST 2015

£ CHANGE ON 2015

% CHANGE ON 2015

South East

£13,270

£13,216

+£54

+0.004%

London

£12,940

£12,992

-£52

- 0.004%

East of England

£12,470

£11,760

+£710

+6%

South West

£12,060

£11,648

+£412

+3.5%

East Midlands

£11,520

£10,523

+£997

+9.4%

Scotland

£11,270

£10,080

+£1,190

+11.8%

North West

£10,820

£10,343

+£477

+4.6%

Northern Ireland

£10,580

£10,976

-£396

-3.6%

Yorkshire & Humberside

£10,520

£9,744

+£776

+7.9%

North East

£10,310

£9,630

+£680

+7.06%

West Midlands

£10,110

£10,270

-£160

-1.5%

Wales

£9,990

£9,856

+£134

+1.3%

UK

£11,620

£11,200

+£420

+3.75%


Scott Gallacher, director of Leicester-based Rowley Turton, said the figure of £11,620 a year is somewhat modest.

He said while pensioners might be able to live on that provided they have repaid their mortgage and other debts off, £11,620 is not a figure to aspire to given that the average earnings in the UK are £26,500 a year.

Mr Gallacher said: “It is also very concerning that the new flat rate state pension is just £8,093 a year; consequently people will need an additional £3,527 a year of net income from other sources such as pensions.

“With today’s low annuity rates you would need to accumulate a pension fund of around £116,000 to provide an index linked annuity sufficient to bridge this £3,527 a year gap.”

ruth.gillbe@ft.com