The amount you need for a comfortable retirement has increased dramatically in a year – and you may not have enough

British pensioners are worse off than their peers in Germany, Australia and Ireland as their financial situation worsens, a report published today shows.

The UK ranks 14th out of 44 developed countries worldwide for retirement security in the comprehensive annual Global Retirement Index.

The reason it has not achieved a higher position is because the financial pressures on Britons are increasing, making it increasingly difficult to save money for a comfortable retirement.

Experts are warning of a looming pensions crisis in the UK, with more people falling into poverty in retirement because they don’t save enough and the government doesn’t provide enough support.

The research, conducted by French fund group Natixis Investment Managers and seen by Money Mail, compared the lifestyles of retirees around the world by taking into account four factors: health, material well-being, quality of life and finances in retirement.

The UK ranks 18th for health and 11th for quality of life for the second year running.

What is worrying is that the ranking for finances during retirement has dropped three places this year, from 15th to 18th place.

With a score of just 66 percent, the UK was beaten by countries including Chile (70 percent), Singapore (72 percent), Korea (71 percent) and Estonia (69 percent).

New figures yesterday revealed that the UK state pension will rise by £460 in April for pensioners receiving a full, new state pension, taking their total annual income to £11,962.

The annual increase in state pensions is determined by the ‘triple lock’, which guarantees that pension income increases by the higher of inflation, wage growth or 2.5 percent.

Average wages including bonuses rose by 4 percent year-on-year between May and July. It is likely that this figure will be used to set the ‘triple lock’ as it will outpace both inflation and the 2.5 percent.

But around eight million pensioners will not get the full £460 boost because they are on the old state pension or do not qualify for the full annual income.

And for many, the increases they receive in April do not outweigh the loss of the winter allowance this year.

The government also indicated in its first budget, scheduled for October 30, that further tax increases or benefit cuts could be in the pipeline.

Even after the April increase, the state pension will still fall almost £3,000 short of what is needed to achieve a minimum standard of living in retirement, according to pensions industry-approved standards.

The UK state pension will also remain one of the least generous in developed countries. Pensioners in Spain, Belgium, Cyprus and France all receive more generous incomes relative to the cost of living in those countries, according to recent analysis by advisers Almond Financial.

Maintaining a standard of living in retirement is hard enough. But building up savings for retirement is also becoming an increasing struggle in the UK, amid pressures from inflation, sluggish wage growth and rising unemployment, according to analysis by Natixis.

It warns that pensioners are increasingly relying on their own pension savings to support themselves. For most, this means putting money aside in a company or private pension, as the state pension will not be enough to support them in old age.

However, the majority of savers in the UK are not putting enough money aside, which Natixis says will lead to a terrifying collective retirement savings gap of $33 trillion (£25 trillion) by 2050. This will represent a massive increase in the savings gap, which totalled $8 trillion (£6 trillion) in 2015, the firm warns.

Andrew Benton, Head of Northern Europe, Middle East and Africa at Natixis, said: ‘Over the past few years we have seen a number of significant changes that have impacted our finances and plans for the future.

While pension security has improved in the UK, individuals are increasingly taking control of their own pensions in light of changing market conditions.

‘In light of this, financial services providers need to be more proactive in helping people save more – right through to retirement.’

A couple now needs around £59,000 a year for a “comfortable” retirement, or £43,100 for a “moderate” retirement, according to the latest figures from industry body the Pensions and Lifetime Savings Association (PLSA).

These amounts have risen sharply in one year from £54,500 to £34,000. This is thanks to rising inflation last year. Natixis has identified inflation as one of the biggest obstacles for Britons looking to build a decent pension.

Reaching this level of income is out of reach for all but the wealthiest pensioners. Only 16 per cent of Britons still in work even expect to achieve a comfortable lifestyle in retirement, based on PLSA standards.

Younger workers are more optimistic, with 30 percent of 18-34 year-olds expecting a “comfortable” or “more than comfortable” lifestyle, a survey by pension advisor My Pension Expert found yesterday. Only 13 percent of over-55s expect this outcome.

But almost half of 18 to 25 year olds are not yet saving for a company or private pension, according to government figures.

funded support network the Money and Pensions Service reveals. This could cost them hundreds of thousands of pounds in pensions.

Lily Megson, policy director at My Pension Expert, said: ‘The fact that millions of adults in the UK will work for decades but not have a comfortable retirement at the end of them highlights the crisis in retirement planning in this country.

‘Not knowing how much is in pension pots, where those pots are and how best to manage that money are all serious problems. It is clear that both the government and the financial services sector need to do much, much more.’

According to Natixis, Switzerland is the best place to retire, with an overall score of 82 percent, knocking Norway off the top spot it held for the past two years.

Iceland and Ireland finished in third and fourth place respectively, followed by the Netherlands, Luxembourg, Australia, Germany, Denmark and New Zealand.

Countries in the top ten generally performed strongly in all four categories. Switzerland, however, was the only one to rank in the top ten for all four.

Ireland ranked highest in the finance in retirement category. This was based on performance on indicators such as inflation, interest rates, tax burden, government debt and governance. Runners-up were Switzerland, Australia, Singapore and South Korea.

rachel.rickard@dailymail.co.uk

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