Tomorrow's retirees set to live on the poverty line

WARRINGTON based pensions consultancy, Avacade Future Solutions, has analysed its own data of 10,000 UK pension planners to discover that the average retiree will receive 90% less than what they desire to live on in retirement. The research suggests a bleak future for tomorrow's pensioners, with many set to spend their pensionable years on the poverty line.

The research revealed that the average pension pot size is only £33,000, a figure that equates to just £39.66 per week if they were to retire now. With the average living cost for a pensioner revealed to be £199.75 per week, even if they were to receive the maximum state pension; £148.40; tomorrow's retirees will only have £188.06 to spend each week. This worrying statistic underlines just how many will have insufficient funds to live on in retirement. Indeed, with recent analysis revealing that more than 1 million pensioners in Britain are currently living in poverty, Avacade's profiling of those planning for retirement demonstrates that the trend may not only continue, but in fact increase.

The exploration of the data unearthed a significant contrast between what the UK pensioner hopes to receive in retirement, and the reality of what they will achieve. The average target fund size required for the sample to attain their retirement desires is £334,102, based on the majority of the sample hoping for £12,000 per annum in retirement. However, the analysis revealed that planners throughout the UK only have a pension pot of £33,000, which equates to a 90% deficit. The substantial discrepancy between desire and reality reveals a misinformed and subsequently unprepared pension planner, particularly when many are due to gain full access to his or her pension fund in less than six months. The Budget reforms announced for April will see; for the first time in UK pension history; the critical mass of pensioners handed significant financial freedom and control of the largest sum of personal finance many will ever need to manage.

The Pension Survey Data Report not only outlines the findings in more detail, but also officially launches the company's new business direction – formed in direct response to the reforms that are set to revolutionise the pensions landscape. Supporting the firm's decision to enhance its service offer, industry research exposes a staggering 71% of Britons who admit to not understanding the pension changes announced in the Budget, or the wider implications to their retirement fully. This worrying figure reflects a wider population of "nearly retired" who are confused with regard to the most strategic method to plan their pensionable years. The extensive research, champions a call to action for the pensions industry to respond to an overwhelming need to facilitate further awareness and insight around the pension process.

44% of customers due to retire within the next decade will be looking to advisors for help in making financial choices, there is a key drive and desire for information. However, there is currently a significant lack of accessible insight, both in respect to the calibre and the accessibility of any information supplied. To that end, Avacade Future Solutions has developed a suite of industry insights, ranging from whitepapers to pension guides, developed to inform, contextualise and educate the UK pension planner.

Planning for retirement is one of the most important life decisions anyone can make, however, Avacade's in-depth analysis discovered that the average person only begins reviewing their pension aged 51. It also appears that those in relationships are more likely to plan their finances, with the majority (54%) being married when they review their pension. Indeed, only one in five (19%) are single, and even less (11%) are divorced when they review their pension opportunities.

Lee Lummis, Managing Director, Avacade Future Solutions, said:- "The pension reforms announced in the Budget are changing the marketplace considerably. We are delighted to say that we have evolved with them, and are excited about the new direction we are taking. Our research has supported this decision. Discovering that without reviewing the pension options available, many people in the UK would be left with so little in retirement; £39.66 a week; it is clear that our service to offer insight led and IFA backed consultancy is very much in demand. We believe the rest of the industry needs to recognise the number of people that are ill prepared for retirement and ensure they are given the tools to secure their financial futures."

Mayor's warning over local government settlement

LIVERPOOL'S Mayor says the latest local government settlement will inevitably mean more pain for Council services; with the City hit more than 3 times harder than the national average.  The Council is studying the detailed figures from the local government settlement for 2015 to 2016, announced in the House of Commons, to see what impact it will have on the £66.7 million of savings it estimated it would have to find in 2015. The Government's own figures show Liverpool faces a reduction of 5.9% in 'spending power' in 2015/16; compared to the national average of 1.8%.  However, the 'spending power' calculation does not show the full impact of the savings needed, because it offsets the real total by including, for example, income from Council Tax.  From 2011 to 2017, Liverpool has lost 58% of its central government grant; a total of £329 million, 1 of the highest reductions in the Country. Mayor of Liverpool, Joe Anderson, said:- "This latest announcement does not give me any Christmas cheer, but it is hard to know how bad it really is until we have are able to dig into the detail and get behind the smoke and mirrors from Whitehall. I have said before that we are facing the biggest financial challenge ever, and that there is no white charger coming over the hill to save us. In today's announcement the Government have again limited the amount by which we can raise Council Tax. The Government talks about localism, but acts in a way that means we are even more dependent on the 76% of our total budget that they provide, so we are unable to stand on our own 2 feet. We have more difficult and tough choices to make. If we want to keep hold of services, if we want events, if we want to spend money on our young people, our old people, safer, cleaner and greener communities then we will have to find other ways of doing it. By working with partners, other organisations and community groups to deliver services. By finding new ways of raising money, such as by getting businesses to contribute to the cost of the International Mersey River Festival. By attracting more people to live in the City and building more quality housing to generate Council Tax revenue which we can use to support vital services. Despite the challenges, we will continue to do what we can to protect the most vulnerable. We have already demonstrated this by using our own money to minimise the impact of the Council Tax Benefit ut, supporting Credit Unions with £1 million, helping foodbanks with the Mayor's Hope Fund and introducing the living wage for our staff."

Once the analysis of the settlement is complete, a report will be presented to the Cabinet early in 2015 outlining the impact on the Council's finances.