UK has biggest individual pensions gap in EuropePosted on: 22 September 2010 by Allan McLachlan
UK adults must put away on average £10,300 a year to close pensions gap say insurance giant
The UK has the largest pensions gap per person in Europe according to research released today. A new study by insurance giant Aviva shows that the UK's pensions shortfall is £318 billion. This means UK adults need to put away an average of £10,300 a year to close the gap.
The pensions gap refers to the difference between the income needed to live comfortably in retirement, and the actual income individuals can expect. The UK gap is an average based on the 31 million UK adults who are due to retire between 2011 and 2051.
The problem is even more acute for older people who have less time to make good their personal shortfall. It could also affect those on lower incomes, for whom setting aside money may be more difficult.
For those approaching retirement, the issue is urgent. Assuming a retirement age of 65, a 50-year-old still has 15 years in which to invest. However, someone in their 60s has much less time to make up a considerable shortfall.
Toby Strauss, Aviva's UK Life CEO says: “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. However, the problem is not without solution. By investing from an early age, even a small amount can make a big difference in closing the gap. The younger a person is when they start putting money away, the more time they have to build up a sufficient fund to provide the lifestyle they desire in retirement.
“Today’s research should act as a wake-up call for individuals and governments across Europe, particularly in the UK. Fortunately it is not too late for people to take action. Aviva believes that effective partnerships between the Government and the private sector are crucial to solving this problem.”
To help people better understand pensions and to aid retirement planning, Aviva has launched a series of print and radio adverts to encourage younger generations to start putting money aside for the future. It is also launching a new iPhone app which allows Aviva customers to plan their investments.
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