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Fifth expect to retire on less than £10,000 a year

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  • 31/03/2010
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Fifth expect to retire on less than £10,000 a year
Almost a fifth (18%) of people retiring in 2010 expect to receive less than £10,000 a year from their pensions and investments, as expected incomes drop for the third year runnning, research suggests.

The figure, up from 11% in 2009 and 9% the previous year, means retirees in 2010  expect to be £1,270 a year worse off than their 2009 counterparts, and £2,154 poorer than the 2008 group.

Average annual incomes for those retiring this year are £16,509 compared to £17,779 in 2009 and £18,663 in 2008, with expected incomes 7% lower than in 2009 and 11.5% down on 2008, according to Prudential’s Class of 2010 study.

The shortfall creates a £3.49bn hole in this year’s pensioners pot, compared to last year, Pru’s figures suggest.

The study, based on a survey of 1001 people over 45 years old, also suggests a gender bias in the reduction of pension pots.

While the annual pension men expect to receive has fallen by 3.5% from £20,313 to £19,593 since 2009, women’s has dropped by 10.9% from £13,671 to £12,169.

Prudential says the figures suggest people are becoming more realistic about what they can expect from their later-years nest egg, considering the adverse effects of the recession and stock market volatility.

However, director of investment funds Andy Brown adds: “The fact people retiring this year expect to receive less in their pensions than people who have retired in the past two years should come as a reminder that putting money into a pension or other savings, and starting sooner rather than later, is the only real way of guaranteeing a decent income in retirement.”

The Government laid out its plans for pensions tax relief in last week’s Budget, including a stepped taper of 1% of relief for every £1,000 of gross income as “the most appropriate” way to taper down the rate of relief available.

But Tories claim single pensioners will be £110 worse off after the Chancellor’s speech last week.

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