Britain's retirement security has fallen over the past year, a yearly study has revealed.
According to the 10th annual Natixis Investment Managers’ Global Retirement Index 2022, this year could prove to be the "most challenging year to retire in recent history".
As global markets cope with the fallout from Russia's war in Ukraine, disruption to the global supply chain, the aftermath of unprecedented weather events and soaring inflation, Britons are expected to be particularly affected.
According to the 77-page report, Danger Zone: Global retirement security challenges come home to roost in 2022, The UK has fallen one place in the GRI.
It was 18th last year; this year it has fallen to 19th place out of 44 countries in the index, with an overall score of 69 per cent.
This is a drop from 2021 when the overall score was 69 per cent.
The index is designed to examine the factors that drive retirement security, combining key indicators essential for people to enjoy a healthy and secure retirement.
But the report said: "This year’s index reveals that 2022 could be one of the worst years to retire in recent memory.
"Retirees risk not only taking retirement income from an already depleted pool of assets, but also they will have to take on greater risks with portfolios to make up the ground already lost."
The GRI comprises 18 underlying performance indices, grouped into four thematic indices which cover key aspects for welfare in retirement:
- The material means to live comfortably in retirement
- Access to quality financial services to help preserve savings value and maximise income
- Access to quality health services
- A clean and safe environment.
Natixis Investment Management's head of northern Europe, Andrew Benton, said: "The challenges that are being faced now and will be faced in the future are clear.
"Getting retirement right and helping to ensure individuals can live with dignity after their working years is a core sustainability issue for society.
"Difficult decisions will have to be made as policy makers strive to reconcile balance sheets with commitments to public retirement and healthcare benefits."
He added: "Success will require a concerted effort from not only policy makers, but employers, the financial services industry, and individuals. It all starts with understanding the risks
For the four sub-indices, the UK ranks as follows in the 2022 GRI:
- 29th for finances in retirement
- 21st for health (compared to 18th in 2021, and 19th in 2012)
- 7th for quality of life (7th in 2021; 6th in 2012)
- 23rd for material wellbeing (compared to 22nd in 2021; and 27th in 2012).
As reported previously by FTAdviser, inflation is posing the biggest concern.
For most of the past decade inflation has been exceptionally low. Between 2012 and 2020 inflation for the 38 OECD member countries averaged just 1.76 per cent.
However, in the first half of this year, inflation rose for those 38 countries, spiking at 9.6 per cent in May 2022. It has been predicted that inflation will hit between 13 to 15 per cent in 2023, although the government has pledged a variety of measures to overcome this.
simoney.kyriakou@ft.com
