The ONS report on retired households demonstrates how over-reliant people have become on pensions as a source of income in retirement, Equity Release Council chairman Nigel Waterson said.
The Office for National Statistics piece called ‘What has happened to the income of retired households in the UK over the past 40 years?’ revealed that increases in private pensions alone were responsible for over half of the rise in the income of retired households between 1977 and 2016.
Waterson said: “Such a reliance is a concern when the future viability of workplace pensions as a source of retirement income is assessed.
“Recent findings from The Equity Release Council highlighted that those on defined contribution (DC) schemes making contributions of 8% throughout their working life, can expect to retire with a pension of only 15% of their final salary – only one fifth of the pension of an identical worker in a defined benefit (DB) scheme. As a result, millions will face severely reduced retirement incomes.
“At the same time, older Britons have seen huge increases in the value of their homes, with total homeowner equity in England owned by over-55s reaching £1.8 trillion in 2016.
“If the next generation of retirees are to enjoy a more comfortable way of life in retirement, it is vital that housing wealth is taken into account when planning retirement.”