British pensioners to run out of money 10 years too early

The World Economic Forum report warned that the so-called retirement savings gap is on the rise across the world.

British pensioners will run out of money roughly a decade before they die, a new report by the World Economic Forum has warned.

The authors of the report took the average savings at retirement for countries around the world and calculated how long that would last based on an assumed reduced income of 70% of final pay.

They found that male British pensioners were expected to run of money 10.3 years before they died, while female pensioners can expect to outlive their pension pots by 12.6 years.

 

The figures do not factor in the state pension, although for younger people in particular, this should not be relied on. Last year, the Government’s Actuary Department (GAD) warned that National Insurance contributions need to rise for the state pension to exist in its present form, or else it will be exhausted by 2033. 

The World Economic Forum report warned that the so-called retirement savings gap is on the rise across the world, being driven by increases in life expectancy.

While Britain’s retirement savings gap is relatively high, it is not the world’s worst offender. In Japan, women are expected to outlive their savings retirement by almost 20 years, while for men it is 15 years.

Female pensioners in Australia had a slightly higher deficit than in the UK, while the deficit for men was slightly lower.

Of the countries given, the United States had the lowest figures, with the retirement savings deficit standing at 8.3 years for men and 10.9 for women.

The report notes that the retirement savings gap globally is set to skyrocket within a few decades. According to its research, the retirement savings gap in 2015 stood at $70 trillion globally. That, however, is expected to grow by 5% per year between 2015 and 2020, leading to a gap of $400 trillion by 2050.

In the UK, the assumed growth per year of the pension savings gap is slightly lower than the global average, at 4%. Between 2015 and 2050, the retirement savings gap is expected to grow from 8 trillion to 33 trillion.

China has the highest pension savings gap growth rate, at 7%.

 

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