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

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



Mistakes Happen

G20 summit: Gordon Brown announces 'new world order'

Gordon Brown announced the creation of a "new world order" after the conclusion of the G20 summit of world leaders in London.



The Prime Minister claimed to have struck a "historic" deal to end the global recession as he unveiled plans to plough more than $1 trillion into the world economy.

"This is the day that the world came together to fight back against the global recession," he said. "Not with words but with a plan for global recovery and reform."

Barack Obama, the US President, hailed the deal as a "turning point" for the global economy which would put it on the path to recovery.

However, critics pointed out Mr Brown had been unable to secure agreement on a new co-ordinated fiscal stimulus package that he and Mr Obama had been urging. The Prime Minister has staked his political future on securing a deal at the summit.

Under the $1.1 trillion (£750 billion) agreement, which followed several days of intense negotiation, struggling economies will be offered money provided to the International Monetary Fund (IMF) by wealthier nations.

"I think a new world order is emerging with the foundation of a new progressive era of international co-operation,"

The G20 leaders also agreed restrictions on bankers’ pay, rules to target tax havens and hedge funds and a new financial early warning system to prevent a future economic meltdown.

"Today’s decisions, of course, will not immediately solve the crisis. But we have begun the process by which it will be solved," Mr Brown said. "I think a new world order is emerging with the foundation of a new progressive era of international co-operation,"

Following the announcement of the deal at the ExCeL conference centre in London’s Docklands, the FTSE share index closed up more than four per cent. Other stock markets around the world also rose sharply.

The conclusion of the summit also coincided with the release of figures that suggested the British economy could be starting to recover. House prices have risen and the Bank of England claims that lending to businesses has improved.

Mr Brown’s delight at securing the agreement — which had been under threat from Nicolas Sarkozy, the French President, and Angela Merkel, the German Chancellor — was evident.

The success was echoed by Mr Obama. "By any measure the London summit was historic," he said. "It was historic because of the size and the scope of the challenges that we face and because of the timeliness and magnitude of our response."

Mr Sarkozy, who had threatened to walk out of the talks unless he got action on tax havens, said a "page has been turned" on the old financial model, the "Anglo-Saxon model".

One trillion dollars will be made available to the IMF and, in turn, to countries threatened by the downturn. However, Mr Brown made it clear that he did not intend to apply for funds for Britain, despite opponents warning that the country will soon need a bail-out due to the growing deficit in the public finances.

Mr Obama, who leaves Britain after a three-day visit on Friday morning, played an important part in brokering the deal, in particular French concerns over the deal on tax havens. A senior White House official said the President took Mr Sarkozy to a corner of the room for a chat. He then acted as a go-between with President Hu Jintao, of China until they both agreed to a solution put forward by Mr Obama.

As The Daily Telegraph disclosed on Thursday, a key part of the global rescue package included united action to curb excessive pay to bankers and traders. continues here