PENSION VALUES TO FALL BY 60%

SOARING inflation could plunge millions of pensioners into poverty as it cuts the real value of their funds by 60 per cent, worrying new figures reveal.

A typical pensioner on a fixed income will lose nearly £10,000 a year in spending power during the average 20-year retirement.

At least nine in 10 people with a private pension opt for a fixed-rate income in retirement – which means around 15 million people are facing a savings crisis.

Older people approaching retirement need to see their pension funds more than double over the 20 years after they finish work if they are to beat inflation, pensions giant Prudential has warned.

Analysts said pensioners are the victims of what is known as the “Silver” rate of inflation, because they spend a higher proportion of their income than  the rest of the population on price- busting food and fuel.

Prudential’s figures show that the average person retiring this year expects an annual income of £16,600. If that income remains fixed, it will be worth a mere £6,700 in 20 years – effectively a £10,000 pay cut.

Assuming that inflation remains at its current level of 4.4 per cent, pensioners will need an annual income of just over £40,000 if they expect to maintain their standard of living for 20 years.

(Source Telegraph)