Workers to retire on less than minimum wage

By Jennifer Hill

LONDON (Reuters) - British workers are on course to retire on little over 200 pounds a week -- less than the current minimum wage, research shows.

On average, workers will be forced to live on just 215 pounds a week when they retire -- less than the income of someone who works 40 hours a week on the minimum wage of 5.52 pounds an hour.

That means people are set to see their total income, including state and private pensions, drop by 53 percent on reaching retirement, according to Fidelity's third annual retirement index.

The index, built on financial modelling and a survey of more than 1,000 people, showed last year that workers could expect a 50 percent drop in income.

But the most recent figure is an improvement on the first of the three years, when workers were in line for a 58 percent drop in income.

However, Fidelity said prospects could deteriorate rapidly as final salary schemes are replaced with less generous defined contribution ones.

Members of final salary funds (also known as "defined benefit") receive a pension linked to their final salary and length of service, and can expect to retire on two-thirds of pay after 40 years of service.

But people who save in defined contribution schemes, where retirement income is tied to contribution levels and investment performance, are in line to receive just 38 percent of their final salary in retirement, according to the research.