Generation gap will leave future pensioners £3,000 a year worse off

A survey of employees aged between 45 and 55 by Prudential, the insurer, found that they were pencilling in an annual pension of about £14,000, almost a fifth lower than the £17,000 that those who are just stopping work are likely to receive.

The Times reports that seven in every ten of the 1,000 people polled said that were expecting to have a lower standard of living than pensioners now, compounded by the stop-start approach to saving that some have adopted during their working lives.

It comes amid a drive by George Osborne to free up the options of savers at or approaching retirement, including by giving them the chance to take their pension savings as cash or invest them elsewhere.

The insurer’s research found that almost half of the age group surveyed had put their pension contributions on hold at some point. More than one in ten had stopped putting money into a scheme for more than a decade and 20 per cent had suspended their contributions for between three and ten years.

Vince Smith-Hughes, from the Prudential, said it was still not too late to act. A 45-year-old expecting to be in work for the next 20 years could bridge the £3,000 a year gap by contributing £70 a month to an additional scheme.