Just two-fifths of retirement income provided by pensions

Less than two-fifths (36%) of the average retirement income before tax is made up by pensions, according to a new report. The figure drops to less than a third for single pensioners, according to the analysis of Government data from iSIPP. The average incomes before tax were £30,570 for pensioners, rising to £41,130 for couples and dropping to £20,120 for single pensioners. Benefits, including the State Pension, made up the biggest proportion of incomes at 44%. Investment income contributes just over £2,100 year to average incomes while earnings on average amounted to over £3,800 a year across all retired people. The majority (97%) of retired people received the State Pension while 71% had private pension income. Around one in seven (14%) had earnings from work while 58% had some 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.” iSIPP analysed the latest Government data for retirement incomes from the 2021/22 tax year.

Just two-fifths of retirement income provided by pensions

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