Weekly pension expected to rise by £13 in 2060

Weekly pension expected to rise by £13 in 2060

Britons retiring in 2060 can expect to have an average weekly income of £275, according to research by the department for work and pensions.

A pensioner retiring last year, according to the 17-page Pensioner Income Projections, would receive an average of £262 a week, which includes the state pension and any workplace pension savings.

Beyond the 5 per cent increase expected over the next 45 years, the DWP research also shows that defined contribution pensions will fill the gap left by the decline in their defined benefit equivalents.

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The report said: “The mean pension income appears to remain at a similar level over time.

“However, the figures for 2014 to 2018 are slightly higher as they contain more men than women, while female state pension age is increasing to catch up with that of men, and men have higher incomes than women.

“From around 2020, overall pension incomes are on a slowly increasing trend.”

Weekly pension income in 2014Weekly pension income in 2060
DC pension£24£78
DB pension£103£36
State pension£135£161

Source: DWP

The research also showed that in 2014 income from DB-only private pension schemes is most common, with around 40 per cent of savers having this type of pot while DC-only schemes are the least common at 5 per cent.

By 2060 the DWP research showed this pattern will be reversed and DC-only schemes will account for around 50 per cent of savings.

The number of people with no private pension scheme is expected to decrease from one in five to one in 10.

The research also looked into gender projections and found that a man reaching state pension age in 2014 has, on average, £302 per week in pension income, reducing to £300 in 2060.

Meanwhile, a woman reaching state pension age in 2014 has, on average, £182 per week in pension income, increasing to £250 in 2060.

The report said: “In terms of gender, women see a slight increase in incomes whereas for men incomes remain broadly flat.

“This means that the gender gap between the pension incomes for men and women is projected to narrow over time.”

Adviser view

Tom Dean, a financial planner with London-based Plutus Wealth Management, said: “It is very interesting and will open some of the next generation’s eyes to the increased personal responsibility people will have for their pension.”