Large UK pensions gap to increase debt likelihood?

The considerable pensions gap facing people in the UK could increase their likelihood of struggling with debt, new research has indicated.

A study …

The considerable pensions gap facing people in the UK could increase their likelihood of struggling with debt, new research has indicated.

A study conducted by Aviva revealed British adults face the largest such monetary difference per person in the whole of Europe.

The size of the gap – which refers to the amount of income required to live comfortably in retirement and the actual wages people can currently expect to receive – means individuals must put away £10,300 a year to bridge the discrepancy.

This amount, which was based on the 31 million UK adults due to retire between 2011 and 2051, was above that facing individuals in Germany (£9,700), the Republic of Ireland (£7,600) and France (£6,600).

Carried out in conjunction with Deloitte, the investigation found the UK's overall pensions shortfall to lie at £318 billion.

And Aviva warned the problem could be especially distressing for older people who have less time to close the gap of their personal shortfall.

Those on lower incomes, who may find it more difficult to save for when their employment ends, could also be affected.

Toby Strauss, chief executive officer at Aviva UK Life, described the figures as startling.

He explained: "We know from our research that many people in the UK are planning to work later into life, but this will not solve the issue fully."

Prudential's recent Retirement Shock study showed many women could encounter financial hardship in the latter years of their lives.

This is because more than one-in-four females over the age of 40 who live with a partner are planning to rely on their husband's pension when they retire.

By James Francis
 

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