Inflation decrease welcome relief for UK pension pots

Today's announcement that inflation levels have decreased to 3 per cent will hopefully be good news for UK retirees. As Lincoln Financial Group research revealed, 55 per cent of those approaching retirement were worried that inflation and rising costs of living mean they will not be able to afford to meet their lifestyle needs when they retire.

Turbulent market conditions have already seen many pension pots significantly decrease in value and when we carried out our survey in early autumn 2008, two fifths (41%) of the UK's population believed they will entirely run out of retirement income by the time they reach the age of 85. Lincoln's research has also found that one in ten (11%) weren't even certain that they have enough money in their pension pot to last them to the age of 70.

Over half (53%) of UK adults relied on a pension - other than the state provision - to provide them with an income in retirement, so it is vital that they consider all retirement product options to ensure they get the financial support they require from their pension.

Simon O'Connor, Head of Products and Marketing at Lincoln Financial Group, said: "With recent decreases in inflation, which will hopefully have an impact on the pensioners' inflation rate which is still well above the headline level, pensioners will hopefully feel they are able to stretch their retirement funds a little further as the cost of living decreases. Unfortunately not all household expenses are decreasing, so it is extremely important that people budget and plan for their retirement especially with retirement funds suffering in the current market.

"As retirees have seen their pension pots dramatically decrease over the past year they are now recognising the value of flexible retirement pension products and we have seen a 30 per cent increase in enquiries for Lincoln i2Live".