Third of pensioners living 'in poverty'

“With pensioner poverty levels of 30%, we are now officially among the worst in Europe,” according to Michael Kennedy, director of financial planning at Principle First.

“The European Union defines ‘poverty’ as surviving on an income less than 60% of the national average. This now applies to almost a third of our pensioners. It puts us on similar levels of pensioner poverty as Lithuania and Latvia, and far behind the continental countries,” he said.

This bleak situation is set to get even worse, when you consider the dire state of retirement planning here, Mr Kennedy added.

“At present, only 40% of the working age population are saving into a pension, whether that be a company, personal or private pension. Researchers at Halifax say that the average age for people who do start a pension is 32, but at Principle First we urge our clients to start saving for their retirement much earlier.

“People appear to be relying on the state pension as their core income in retirement. Our clients are often shocked when we tell them just how little that will be. Even if you qualify for the full basic state pension, you now receive just 95.25 a week, which is less than 5,000 a year. That would be topped up by government pension credit to 130 for a single or 198.45 for a couple, but that part is means-tested, so it is given only to those who have no additional savings,” he said.

With increasing longevity, retirement is also longer than ever before, so that whatever savings we have for our retirement are now spread thinner than in the past.

“The average life expectancy for pensioners in the North West is now 82 for men and 85 for women. Our pensions savings have to sustain us now for almost 20 years,” Michael Kennedy said.