Pension savings make up less than two fifths of retirement income, new data from iSIPP has shown.
Analysis by the pension provider found average income before tax is £41,130 for pensioner couples, dropping to £20,120 for single pensioners. However, just 36% of income before tax, around £11,100, is provided by pension saving whether it is from occupational or personal pensions. In comparison, benefits including the State Pension make up 44% of income.
The findings showed that on average, investment income contributes just over £2,100 a year, while earnings amount to more than £3,800 a year across all retired people.
iSIPP said for retired couples, pension income accounts for nearly 39% of their total pre-tax income with benefits accounting for 38%. Investment income contributes 7% and earnings around 16%. For single retired people, pensions account for around a third (31%) of income, with benefits responsible for nearly 56% of income.
The analysis shows that nearly all (97%) of retired people receive the State Pension, while 71% have private pension income. Around one in seven (14%) have earnings from work and 58% enjoy investment income.
Hrishi Kulkarni, managing director at iSIPP, said: “Private pensions make a major contribution to income in retirement with more than 70% of retired people having some income from retirement savings either through an employer or private pensions. However, it is instructive to find out that pensions only provide 36% of income in retirement with benefits including the State Pension accounting for a higher proportion of retirement income.
“Increasing saving for retirement can have a major impact on how comfortable people are when they stop work and that should also include keeping on top of pension savings you no longer contribute to. Consolidating them into one fund can help reduce fees and potentially improve their performance.”
