Impact of interest rates on pensions calculator explained by Pinsent Masons

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Impact of interest rates on pensions calculator explained by Pinsent Masons

Tue 7th Dec 2010

A source from Pinsent Masons has discussed the effect of low interest rates on people's retirement savings.

Robin Ellison, a partner at the international law firm, explained that the level of annuities has been brought down by the interest rates in the UK.

"Low interest rates, while they help the economy generally, are very unhelpful for people who are retiring and coming up to retirement, especially if there is high inflation - as there is," he said.

In his opinion, anyone retiring in the past couple of years will have been affected by this pattern, although he accepted that low mortgage rates will have helped some people with their finances.

When asked how much consumers should aim to put aside in their lifetime, Mr Ellison suggested the rule of thumb is 20 times the amount a person wants to receive annually when they finish working.

Independent wealth manager Heartwood recently estimated that the wealthiest ten per cent of households in the country are likely to spend 16 per cent of their income on recreation and culture over the next 20 years.

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