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Featured - Account Types
What type of savings account do you need?Find out about the different types of savings accounts available to suit a variety of needs.
Savings
ISAs
Residential
Buy to let
Specialist mortgages
Featured - Debt and your credit score
How debt impacts your credit scoreA healthy credit score has its benefits, so make sure you manage your debt correctly.
Loans
Featured - Life Insurance
Life InsuranceFor peace of mind that your loved ones will be supported financially after you die, consider taking our life insurance. Find out more and compare policies.
Home & vehicle
Health & travel
Featured - High interest current accounts
Find current accounts offering in-credit interest rates up to 5.00% AER.
Current accounts
Featured - Purchase Cards
Best purchase credit cardsExplore the best cards with a 0% introductory period.
Credit cards
Credit repair
Calculators & guides
Business savings
Business products
Business insurance
How much can I give as a cash gift?
How much can I give as a cash gift?Will your loved one's gift be tax affected?
Categories
Featured guides
Popular news
Latest news - by category
Other money & finance news
Featured Star Ratings categories
Other Star Ratings categories
Many workers hoping to retire in early 2021 will have had their retirement plans shattered by the Covid-19 pandemic’s impact on the economy. Last year saw a turbulent stock market, which may have impacted the pension pots of those hoping to retire soon. As well as this, 2020 saw saving rates fall to historic lows – further impacting some workers’ retirement savings.
While the pandemic had wreaked havoc on many people’s retirement plans, it was not all bad news as last year pension funds grew by 4.9%, albeit this was much lower than the growth of 14.4% achieved in 2019.
Despite the pension fund growth, the impact of the pandemic on the economy and people’s everyday finances, along with falling annuity incomes, will mean that those set to retire soon may not have as much in their pension fund as they expected.
Indeed, those looking to retire with an annuity income will be disappointed by the latest Moneyfactscompare.co.uk research, which found that the average annual annuity income has fallen for the third consecutive year.
Last year saw the average annual annuity income fall by 6.3%, however this fall was less than the previous year when it fell by 8.5%. “Retirees considering an annuity would be disappointed to see another fall in the average annual income for the third year in a row, so it would be understandable for them to favour pension drawdown instead,” explained Rachel Springall, finance expert at Moneyfactscompare.co.uk. “Indeed, since pension freedoms were introduced in 2015, annuity income has fallen for five out of the six years. Growth has not been seen across the market for one full year since 2017, which was just 1%.”
As Springall highlighted, the fall in annuity incomes has resulted in more retirees considering pension drawdown instead. Pension drawdown enables retirees to withdraw money from their pension pots, with 25% of withdrawals from the pension pot being tax-free. To find out more about pension drawdown read our guide on how pension drawdown works.
Although pension drawdown can be good way for some retirees to fund their post-work lifestyle, it has the risk of pensioners running out of money during their retirement, especially as many people underestimate their life expectancy.
In addition to this, some consumers have had to use pension drawdown to take money from their pensions due to the financial impact of the pandemic, as Springall explained: “In light of the Coronavirus pandemic, some consumers may have made the decision to dip into their pot using pension freedoms or plan to do so soon. Billions of pounds were taken out of pensions during Q3 2020 according to HMRC and this money could have been drawn for more immediate financial issues or even to help a family member during challenging times.”
As the economic uncertainty caused by the pandemic continues, workers looking to retire soon should consider getting independent financial advice to discuss their best options.
For those already retired or who are about to retire soon, there are a number of ways that they can boost their retirement income.
Those who own their own home can consider downsizing to a smaller property or one located in a cheaper area. Alternatively, homeowners who want to remain in their property, can consider equity release, although this has long-term financial implications and, as such, they should speak get independent financial advice before making the decision. More information about equity release can be found on our equity release explained page.
Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time. Links to third parties on this page are paid for by the third party. You can find out more about the individual products by visiting their site. Moneyfactscompare.co.uk will receive a small payment if you use their services after you click through to their site. All information is subject to change without notice. Please check all terms before making any decisions. This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.
The Labour Party committed to protecting the Triple Lock in its manifesto, but how long is it sustainable?
The Labour Party committed to protecting the Triple Lock in its manifesto, but how long is it sustainable?
Autumn Statement 2023 sees National Insurance contributions cut to 10% while the State pension is set to increase by 8.5%
National Insurance contributions cut to 10%; State pension set to increase by 8.5%
When measured against both state and private pension averages around Europe, the UK often falls far down the list of the most well-off countries. Keep reading to find out three financial aspects that could affect your later-life income and how to overcome them, plus three unmissable financial opportunities to prioritise in retirement.
Find out three financial aspects that could affect your later-life income and how to overcome them.
The Labour Party committed to protecting the Triple Lock in its manifesto, but how long is it sustainable?
The Labour Party committed to protecting the Triple Lock in its manifesto, but how long is it sustainable?
Autumn Statement 2023 sees National Insurance contributions cut to 10% while the State pension is set to increase by 8.5%
National Insurance contributions cut to 10%; State pension set to increase by 8.5%
When measured against both state and private pension averages around Europe, the UK often falls far down the list of the most well-off countries. Keep reading to find out three financial aspects that could affect your later-life income and how to overcome them, plus three unmissable financial opportunities to prioritise in retirement.
Find out three financial aspects that could affect your later-life income and how to overcome them.
Moneyfactscompare.co.uk will never contact you by phone to sell you any financial product. Any calls like this are not from Moneyfacts. Emails sent by Moneyfactscompare.co.uk will always be from news@moneyfacts-news.co.uk. Be ScamSmart.
Moneyfactscompare.co.uk will never contact you by phone to sell you any financial product. Any calls like this are not from Moneyfacts. Emails sent by Moneyfactscompare.co.uk will always be from news@moneyfacts-news.co.uk. Be ScamSmart.
Moneyfactscompare.co.uk will never contact you by phone to sell you any financial product. Any calls like this are not from Moneyfacts. Emails sent by Moneyfactscompare.co.uk will always be from news@moneyfacts-news.co.uk. Be ScamSmart.
Moneyfactscompare.co.uk will never contact you by phone to sell you any financial product. Any calls like this are not from Moneyfacts. Emails sent by Moneyfactscompare.co.uk will always be from news@moneyfacts-news.co.uk. Be ScamSmart.
Moneyfactscompare.co.uk will never contact you by phone to sell you any financial product. Any calls like this are not from Moneyfacts. Emails sent by Moneyfactscompare.co.uk will always be from news@moneyfacts-news.co.uk. Be ScamSmart.
Moneyfactscompare.co.uk will never contact you by phone to sell you any financial product. Any calls like this are not from Moneyfacts. Emails sent by Moneyfactscompare.co.uk will always be from news@moneyfacts-news.co.uk. Be ScamSmart.