Four in 10 British workers expect that they will continue to work past the age of 65, with a further 14% predicting they will have some form of part-time employment.
Changing attitudes towards retirement in Britain mean that 65 is no longer retirement to be the end of an individuals working life. This contrasts with our European counterparts who consider retirement to begin once they have stopped full-time work at 65. In France half the population intend to stop work altogether at this age.
While there are both health and financial benefits to working past State Pension age, there are concerns that many workers are working longer as they have failed to make sufficient provisions earlier in their careers. According to the Retirement Readiness Study from Aegon, only 12% of people have a structured financial plan for retirement – while four in 10 have no idea how they will fund retirement at all.
According to recent figures from the Department of Work and Pensions, nearly 12 million UK workers are under-saving for retirement, despite the introduction of auto-enrolment.
Changes in Pension Law
In 2011 legislation was introduced to scrap the compulsory retirement age in Britain. Before April 2012, companies could make employees take mandatory retirement once they reached the age at which they could claim their pension. New pension freedoms introduced by the Chancellor in this year’s Budget support the more flexible attitude to retirement now in place in Britain.
Rather than having to buy an annuity, workers can now choose to drawdown all or part of their pension pot at retirement. For those that intend to continue working full-time leaving their cash invested will help to secure a better quality of life once they do choose to stop work. For part-time workers, small withdrawals can be made to supplement their income.
David Macmillan, managing director at Aegon UK said that the Government’s decision to provide greater pensions flexibility sits well with the plans of many workers who see retirement not as the day they stop working, but the point at which they scale back their hours.
“The fact the Government is also allowing people to continue making pension contributions of up to £10,000 each year, whilst taking a pension means people can continue to top up their pension pot whilst drawing an income,” he said.