Rockingham Retirement, a British retirement income specialist, suggests that inflation could wipe out the spending power of UK pensioners who are receiving fixed income from standard annuities.
The Financial Times Adviser article indicates that a 5 percent rate of inflation could erode 40% of the value of an 80,000 pound pension fund within 10 years.
In 1975, following the early 70s recession, inflation shot up from 6.3 per cent at the start of the decade to 24.2 per cent. Five years later, in 1980, inflation was running at 17.9 per cent.
Steve Hunt, managing director at Rockingham Retirement, said: "Pensioners at that time who were on a fixed income from their annuity arrangement were reduced in many cases to abject poverty, as their retirement income could not hope to keep pace with inflation.
Source: Financial Times Adviser
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