Standard Life: "Inflation-proof your pension"

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Standard Life: "Inflation-proof your pension"

Mon 23rd Jun 2008

Pensioners could lose up to half their spending power over ten years if pensioner inflation remains at around six per cent a year, Standard Life is warning.

Using government inflation figures and Office of National Statistics data, the investment and banking company calculated that someone with a pension pot of £80,000, buying a level annuity, would spend their entire monthly income on basic living costs within 20 years of retirement.

This includes income from private and state pensions and is based only on essential expenditure such as food and fuel.

Andrew Tully, senior pensions policy manager at Standard Life, said that pensioners on a fixed income will be "feeling the pinch, with no sign of an immediate end to their misery".
He offered solutions such as inflation proofing income with an index-linked annuity, or using a higher initial income from a level annuity in the hope that process and inflation stabilise over time.

A YouGov poll by pensions provider Friends Provident found last week that more people trust an employer or pensions provider than the government to ensure an adequate pension.

Just five per cent would put Gordon Brown in charge of their pension.

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