Credit crunch taking bite out of pensions, says Prudential

Rising household costs and mortgage repayments are pushing people to cut back on pensions contributions, leading to fears of debt management issues in old age.

According to Prudential, people can no longer rely on property to pay for their retirement and around ten per cent now have homes worth enough to live off.

Head of business development for individual pensions at the company, Julie Mulvanny, also said the average retiree has around £25,000 in a pension while annuities contain around £25,000 and occupational schemes have around £50,000.

She added the credit crunch is causing a decline in payments to retirement saving funds.

“If you are struggling to just pay your mortgage and pay the bills in general, I think pensions are an easy one to stop making your payments to,” she commented.

Life Trust Insurance’s 2008 Cost of Retirement report found a typical household required £413,000 for retirement while an individual living alone needed £326,700.

By Morwenna Kearns