Many workers in the UK are heading for a “meagre retirement” as their incomes will be cut in half when they stop work, according to a report from Fidelity.

This conclusion has been arrived at in the Fidelity Retirement Index, which examined levels of pension saving in the UK. It found that many workers have little or no savings and face retirement at subsistence level, well below the level of the national minimum wage.

Those with a final-salary pension plan would enjoy a much higher standard of living than those without, and members of final-salary schemes were generally on track to take an income of 85% of their working life income in retirement.

“The pension savings and State benefit of the average family still fall well short of the recommended income replacement rate of 66%,” said Simon Fraser, president of institutional business at Fidelity International.

“It seems that the UK working population also has unrealistic expectations of when they want to retire – the desired age currently stands at 62.”

He warned that unless workers in the UK saved more a generation would be condemned to a later and more “meagre” retirement than the one they had possibly envisaged.