‘Heavy blow to Brits nearing retirement age’

A collapse in government bond prices deals heavy blow to Brits nearing retirement age; 35% of UK population are not going to have enough money to fund retirement as steep rise in interest rates push 30-year bonds up to 4.69%  – Rudy Khaitan comments on what this means for pensioners amidst growing financial concern for future retirees

 
A steep rise in interest rates has pushed up the yields on government bonds, also known as gilts, to 4.69% – it’s highest level since 1998 – causing bond prices and the size of around 850,000 nest eggs to fall sharply.

Those most affected included Brits who took out pensions in the 1990s and 2000s or paid into individual stakeholder plans over the past two decades with household names.

This comes as a former pensions minister warned that the collapse of ‘supposedly safe’ government bonds could spell a disaster for hundreds of thousands of workers nearing retirement, following an alarming number of members on workplace pension schemes who were automatically put into loss-making investments previously deemed ‘low risk’.

As new data from the UK’s leading later-life lending specialist, Senior Capital, reveals that 35% of Brits are not going to have enough money to fund their retirement, and Rudy Khaitan, Managing Partner of Senior Capital, says there are growing financial concerns for future retirees.

Over 3.5m people aged 50-64 across the nation are currently classified as ‘economically inactive’, while stubbornly high living costs have continued to place retirement plans on hold for a majority of Brits.

Some have turned to equity release as an alternative financial vehicle to access ‘frozen capital amidst a turbulent economic climate – with the 2023 total currently sitting at around £5bn – highlighting an alarming number of the population who are struggling financially.

The same data from Equity Release Council shows that over 55s have taken out a record 13,452 new equity release plans between July and September, drawing a total of £1.7bn out of their properties in Q3 alone.

Further data from Senior Capital reveals 32% of Brits haven’t been able to contribute to their pension due to the rise in living costs, while 37% say their quality of life is going to deteriorate because they don’t have enough money in their pension funds. Highlighting the alarming nature of Britain’s quality of retirement, the national study also found that over 1-in-5 Brits have delayed retirement to keep working due to having insufficient funds in their pension pot.