Nearly two million Britons forced to delay retirement as pension funds hit by credit crunch

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Nearly two million people have been forced to put off retirement after seeing their pension funds plummet.

More than a third of those in jobs and over 55 plan to keep working until the stock market recovers, pulling their retirement income back up with it.

Almost a quarter of this age group now expect to work beyond the state pension age of 65, while 32 per cent admitted they were not prepared at all for retirement.

The survey demonstrates the grim choice facing pensioners in the economic downturn - carry on working into old age or try to make do with a drastically reduced income.

The problem is compounded by interest on savings accounts being at a record low. Tumbling house prices have made equity-release schemes far less attractive.

And final salary pension schemes have been closing on an almost daily basis, forcing workers instead of companies to shoulder the risk of pensions losing their value.

Vicky Redwood, of Capital Economics, said: 'It's a bleak picture at the moment for those retiring and they are going to have to carry on working or accept that their incomes will not be as comfortable as they would hope.

'If you're relying on markets getting back to the level they were then it could take several years.

'One of the problems is that people are relying on equity-release schemes to top up their incomes but house prices have been going down so that is not as worthwhile.

Unfortunately the next year is going to be a time to make some hard choices.'

In March the FTSE 100 fell to its lowest level for more than six years and despite rallying it is still far below what many were counting on. According to financial data providers Moneyfacts, a pensioner who paid £200 a month into a pension for 20 years would have seen a 27 per cent drop in retirement income from August 2006.

A saver who had £50,000 in a savings account in August 2006 would expect £130 a month in interest, compared with just £40 now.

The picture is just as grim for those hoping to release equity from their home.

According to the Nationwide Building Society, house prices hit a low point in February when the average price of a property was £147,746, an annual fall of 17.6 per cent. some.html" target="_blank">continues here

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