Pension dream crushed for millions: Millions to work for longer with warning retirement pots 'eroding'

Millions have had their pension dream crushed as they will be forced to work for longer as spiralling inflation causes their pension pots to diminish.

Standard bills for pensioners have increased by close to a fifth, meaning many have had to scrap plans of retirement just to keep themselves afloat.

The Pensions and Lifetime Savings Association (PLSA) said the cost of a minimum lifestyle has increased from £10,900 in 2021 to £12,800 in 2022 – or 18 per cent – for a single person and from £16,700 to £19,900 – or 19 per cent – for a couple.

Rising food and fuel prices have contributed significantly to the increase in the amounts those wanting to retire need for a minimum standard of living.

The disproportionate increase in the cost of retirement for those on minimum retirement living standards means the UK Government’s commitment to the state pension triple lock, confirmed in the autumn statement, is especially important.

Nigel Peaple, director of policy and advocacy at the PLSA, said: “The past year has been an enormously challenging one for many households in the UK.

“Inflation has risen to its highest rate in 40 years with the cost of essentials and domestic fuel soaring, putting substantial pressure on incomes for working age and retired households, particularly for those on low incomes.

“These figures underline why the Government was right to increase the state pension in line with the triple lock in the autumn statement.”

Financial adviser Samantha Gould told the Daily Express: “Double-digit inflation will erode pension pots over time, so those coming up for retirement are considering whether to continue working.

“High levels of inflation – particularly on necessities such as energy, food and fuel – are impacting people’s ability to pay bills.

“This is particularly detrimental to those on low incomes who spend their money on basic needs.”