How will rising inflation affect pensions? The action you should take to protect your mone

“That’s because even the current rate of inflation, at 3.1 percent, will halve your spending power in 20 years.

“This means growth remains key and pension savers should ideally keep their money invested, ensuring enough of those investments offer some protection from rising prices, such as real estate and infrastructure.

“This is how pension savers can dodge the pension gap trap, where a gulf appears between what a retiree needs to spend to maintain their lifestyle and what their retirement savings actually give them. However, not everyone will have a choice.”

Ben Hampton, Retirement Advice Specialist at abrdn, agrees that erosion of funds is likely due to all-time low interest rates: “With inflation now growing at a rate we haven’t seen for very long time, retirees need to be doing all they can to ensure the value of their savings keeps pace with, or exceeds, the rising costs of living.

“Without action, retirees run the risk of their saving pots being gradually eroded over time, particularly at a time of rock-bottom interest rates.

“With interest rates so low, retirees will likely find that none of their cash investment options attract a return high enough to beat inflation, effectively reducing the real value of their savings.”