Article date: 7 September 2007
- Almost half of people believe they will need a retirement income of over £25,000 a year, fourteen times more than the actual average annuity income
According to new research from Norwich Union, almost a half of people said they need fourteen times the average level of annuity to enjoy a comfortable retirement. The survey, of over a thousand people, identified that 47.3% of people believe they will need a retirement income of over £25,0001 a year.
The average total pension value used to purchase an annuity in 2006 was £26,3642, providing an actual retirement income of around £1,843 a year (£154 a month)3.
On retirement, a pension is used to buy an income in retirement, most often in the form of an annuity, but research has also showed that almost one-in-five people who have a personal pension do not know what an annuity is. A further six-out-of-10 people were at least 40 years old before they learned they had to buy an annuity to fund their retirement4.
Scott Brown, head of annuities marketing at Norwich Union, said: "Mention pensions or annuities and most people just seem to switch off. But when you ask them what income they will need in retirement, people have some very high aspirations. Almost half the people surveyed believe that they will need £25,000 or more a year to fund their retirement, fourteen times more than the actual average annuity income.
"With retirement income, the difference between ‘what people want' and ‘what people will get' is very different and it's essential that individuals face up to their needs in retirement. Current trends such as increasing life expectancy make it vital for people to start considering and planning for what could be a very long retirement, as we are reaching a point where some people will spend almost as long in retirement as they will in work.
Norwich Union offers a series of online tools for people to get information about retirement planning on the http://www.makesenseofit.com/ website. A free customer information pack, "Retiring soon, what happens now?" is also available by calling 0800 051 0806.
Press office contacts:
Robert Pell 01904 452659 Out of hours 07800 666563
Louise Soulsby 01904 452617 Out of hours 07800 699526
Notes to editors:
1 Online survey carried out by Norwich Union, to establish how much annual income people thought they would need for a "comfortable retirement" and received 1,064 responses.
2 Source: Mintel; Annuities and Retirement Income Solutions, Finance Intelligence, August 2007.
3 Calculated on http://www.makesenseofit.com/ annuity calculator, male, aged 65.
4 Source: Marketing sciences; At-retirement monitor 2007.
About Norwich Union
Norwich Union is the UK's largest insurer. It is a leading provider of life, pensions and investment products and one of the largest financial adviser (FA) providers. FAs provide over 70% of the company's long-term savings business in the UK.
Norwich Union's news releases and a selection of images are available from Aviva's internet press centre at www.aviva.com/media.