An individual retiring in 2017 will have a pension pot just three quarters of someone retiring in 2007 immediately before the crash, according to research by Fidelity International.
Its modelling exercise showed a typical pre-crisis retiree earning ended up with an average pot size of £180,106, compared to 2017 retirees who had an average pot of £139,110 - only having 46% of the buying power when securing guaranteed income.
Fidelity modelled the outcomes of a person retiring in 2017, who in 2007, still had ten years of work ahead of them. The retirees were earning £45,000 in 2007 with a £50,000 pot of pension savings already amassed and contributing an ongoing 12% of their salary to a pension. At the end of the period in the 2017, their pension pot was used to buy an annuity at current market rates. The results were then compared to the outcome achieved had they experienced the conditions from the preceding 10-year period, from 1997 to 2007.
Fidelity found that people retiring in 2007 earned wages which maintained their buying power, tracking 0.9% percentage points above the Consumer Price Index (CPI).
However, a person retiring in 2017 would experience almost the opposite, with wage growth running at 1.7% against CPI of 2.7% annually - a full percentage point under inflation.
It also showed lower earnings resulted in lower contributions, with those retiring in 2017 paying in £5,179 less over 10 years as a consequence, with contributions falling from £64,694 to £59,515 on average.
Their salary was uprated through the period using an average from the Office of National Statistics' (ONS) annual survey of hours and earnings data, and their pension contributions were added to their pot and invested.
The firm attributed the stark difference to less buoyant stock markets and plummeting annuity rates.
Fidelity International associate director at personal investing Ed Monk said:
"This all makes grim reading for the 2017 cohort of retirees, yet it's important not to abandon hope. In the period since the crisis the pension freedom reforms have freed many more people to access their pension pot using drawdown instead of an annuity.
"This comes with greater risk but at least provides an alternative to being locked into low paying annuities and gives you greater flexibility over how you manage your income. For those still with some years to go before they retire, there's a chance to make more of the time available left to save."
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