Retiring this year? You’ll still earn £17,000

Picture: David Cheskin/PA Wire
Picture: David Cheskin/PA Wire
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WORKERS retiring in Yorkshire expect to be nearly 10 per cent a year better off than those whose careers ended in 2015 as consumer confidence continues to grow amid the economic recovery.

People retiring this year in the UK expect to receive, on average, an annual income of £17,700, up by £700 on 2015. It marks the third annual rise in a row, according to research published today.

The average annual pension in the Yorkshire region in 2016 is due to be £16,300, up nine per cent compared to last year. But this is eclipsed by the South-East, where pensioners expect to live off £21,500 a year, a 25 per cent increase on 2015.

More than 9,000 people were surveyed across the UK for the annual study by the Prudential, which was first staged in 2008 just as the financial crisis hit global economies.

Despite the rise, those retiring this year still expect to be about £1,000 a year worse off than those who planned to retire in 2008, when the typical expected income was £18,700.

The research also suggests the new pension freedoms introduced in April last year have helped boost people’s financial confidence.

Vince Smith-Hughes, a retirement expert at Prudential, said: “The third consecutive year of growth in expected retirement incomes is very welcome and underlines increasing confidence among retirees, possibly driven by the introduction of pension freedoms. Pensioners are, however, still playing catch-up with the expectations of those who retired before the financial crisis.”

The new freedoms give people aged 55 and over more flexibility to take their pension pot how they wish, rather than being required to buy a retirement income called an annuity.

Annuities have been controversial in recent years owing to plunging rates and concerns that people are not shopping around to get the best deal. The free Pension Wise service was launched in April alongside the reforms to offer guidance to people taking up the new freedoms.

Prudential found that 56 per cent of people retiring in 2016 felt financially well-prepared for their retirement, up from 54 per cent last year.

The study also revealed significant regional variations – with London retirees’ income expectations slipping back significantly compared to a year ago.

Retirees in London have an expected income of £16,800, 22 per cent lower than people retiring in the capital in 2015. After the South-East, residents in Eastern England had the next highest expected annual retirement incomes in 2016 at £19,000, marking a 14 per cent rise on last year.