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Catch up with the latest press releases from LV=

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Rising Utility Costs and Fear of Recession

Press release: 09/05/2008

  • New survey reveals the rise of FRED – the two-thirds of people approaching retirement who are Facing Retirement Earnings Doubts, and are worried about their financial security in retirement.

  • The research also shows a concerning income gap – people say they'll need £20,100 a year in retirement, but know they'll only have £16,900.

  • A quarter of those who are concerned don't save at all, and four in ten of those are not increasing their savings despite their worries.

  • Almost half of people facing retirement are being pressurised by other family members for financial support.

People facing retirement are more concerned than ever about their financial security and income in retirement, according to a new research report (1) from investment, pensions and insurance group LV=. The new LV= 'State of Retirement' report reveals deep concerns among the nation's pre-retirement population about their overall financial situation and level of savings, and how their retirement years may be impacted.

Rise of 'Fred'

One of the key findings is the rise of ‘Fred' – 66% of the survey's respondents say they are Facing Retirement Earnings Doubts, and in the last year have become increasingly worried about their financial security in retirement. This ‘anxious majority' equates to a staggering 6.5m people (2).

Utility bills and rising food costs are biggest worry

People facing retirement believe increasing utility bills and food prices will be the biggest threat to their financial security after they retire. Of those who are concerned about the future, more than three-quarters (77%) highlight these spiralling costs as their biggest financial concern. This equates to 5m (3) people. With the cost of gas, electricity and water having risen by an average of 52% since 2003 (4), and at least six electricity and gas suppliers increasing prices during the first four months of 2008 alone (5), this is seen as a very real threat to retirement income.

Income gap

The LV= 'State of Retirement' report also reveals that people approaching retirement are aware that there is a significant gap between the income they will need to maintain their standard of living in retirement, and what they will actually have. Those surveyed said that on average they would need £20,100 a year in retirement, but believed they would actually have an income of only £16,900 a year (6).

Fear of recession and Credit Crunch

Four out of ten people facing retirement (42%) fear that a recession will affect their wealth when they retire. The next biggest concerns are rising interest rates (35%) and media reporting of the ‘Credit Crunch' (32%).

The LV= survey shows that people facing retirement who are worried about their financial future are particularly concerned about the impact of the following issues:

Area of concern for those worried about the future

No. of people

% concerned

Rising costs of food and utilities



Fears of a recession



Rising interest rates



The media reporting of the Credit Crunch



Increasing life expectancy/people generally living longer



Stockmarket volatility



Job insecurity



Children more financially dependent than before



Not saving enough

Worryingly, around a quarter of those facing retirement (24%) are saving nothing at all towards their retirement, while four in ten (46%) haven't increased their savings despite having serious concerns about their own financial future.

Perhaps most surprisingly, one in six people facing retirement (16%) have actually decreased the level of provision they are making. And a similar number of people (14%) have decided to tackle the situation head on by increasing the amount they are saving long term to supplement their income. Those who are saving more are putting away on average an extra £190 each month, with the minimum amount reported to be just £8 extra each month.

Mike Rogers, Group Chief Executive of LV= said: "The combined impact of the rising cost of living, fears of a recession, and widespread media coverage of the Credit Crunch, has created an anxious majority of people facing retirement who are very concerned about their financial future.

"Despite the well-publicised £27bn7 savings gap, it is worrying that as many as a quarter of the people we surveyed are making no provision whatsoever towards their retirement. Moreover, a further 46% are failing to increase their savings despite fully expecting an income shortfall when they retire."

Family financial pressure

It isn't just the turbulent economic climate that is threatening people's retirement wealth – the LV= research shows that those facing retirement are increasingly being approached by other family members for financial help.

According to the LV= ‘State of Retirement' report, almost half of people facing retirement (47%) have been asked for financial help by a family member in the last year. Furthermore, a quarter of the people who have been approached by a family member (26%), say that this behaviour is unusual, evidencing a trend towards financial difficulties across the board, not just among those facing retirement.

Not seeking advice

More than half of the people surveyed (56%) say they have not yet taken any form of financial advice about retirement planning. This is compounded by the fact that almost three-quarters of people facing retirement (72%) are confused by the financial issues, seeing obstacles to financial planning such as pension rule changes (81%)8 and fast changing tax rules (70%).

Mike Rogers concludes: "Given that so many people are aware they will face financial difficulties in retirement, and that pensions products aren't simple, it is staggering that so few are seeking financial advice. This is obviously not helped by the survey's findings, that many people are confused by what they perceive to be ever changing tax rules.

"Our advice to anyone approaching retirement is to seek professional financial advice to ensure you make the most of your finances when you retire. And young people shouldn't ignore their own retirement needs, despite it being decades away. Saving just a little and often – as much as you can afford – is a step in the right direction."

Notes to editors:

1. All figures, unless otherwise stated, are from Opinium Research. Total sample size was 1655 adults over the age of 50 years. Fieldwork was undertaken between 3rd – 9th April 2008. The survey was carried out online.

2. The over 50s population in the UK is 21,011,000 (Source: Population projections by ONS, 2008). According to the research, 47% of those people are not retired, equating to 9,875,170. The research also shows that 66% of this population agree that they have become more concerned lately about their retirement finances, equating to 6.5m people.

3. Of the 6.5m people who are concerned about their retirement finances, 77% state that their biggest concern is the rising cost of utilities and food, equating to 5m people.

4. Source: Consumer Credit Counselling Service Research, 2008.

5. The following energy suppliers have announced price rises so far this year:

  • 4th January 2008: npower

  • 15th January 2008: EDF Energy

  • 18th January: British Gas

  • 1st February 2008: Scottish Power

  • 17th February 2008: E.ON

  • 21st February: British Gas

  • 20th February: Scottish and Southern Energy

6. Source: The At Retirement Monitor, Marketing Sciences, 2007.

7. Source: Oliver Wyman report for the ABI.

8. Source: The At Retirement Monitor, Marketing Sciences, 2007.


LV= and LV= Liverpool Victoria are trademarks of Liverpool Victoria Friendly Society Limited and LV= and LV= Liverpool Victoria are trading styles of the Liverpool Victoria group of companies. The new LV= brand identity was launched in March 2007.

LV= employs around 2,500 people, serves more than 2.5 million customers and members, and manages around £8 billion on their behalf. We are also the UK's largest friendly society (Association of Friendly Societies Yearbook 2006/2007, total net assets) and a leading mutual financial services provider.

Liverpool Victoria Friendly Society Limited (LVFS) is authorised and regulated by the Financial Services Authority and entered on the Financial Services Authority Register, No. 110035. LVFS is a member of the ABI, AFS and ILAG. Registered address: County Gates, Bournemouth, BH1 2NF.

Liverpool Victoria Life Company LimitedLiverpool Victoria Life Company Limited registered in England No. 597740, authorised and regulated by the Financial Services Authority, entered on the Financial Services Authority Register, No. 110423. Registered address: County Gates, Bournemouth BH1 2NF.