Half the over 50s plan to keep working after retirement
This generation will continue to make a significant contribution to the economy in the future and employers will need to consider how best to adapt to this changing employment landscape.
Worth potential £7bn to UK economy each year
- 5 million over 50s plan to continue working after reaching retirement, 300,000 of whom plan to never stop full-time work
- Those turning 65 this year could contribute estimated £7bn to economy through continuing to work
Research1 on over 50s’ retirement plans has found that half (49%) want to continue working in some form after reaching retirement. Of these people, 43% plan to switch to part-time work, while 6% do not think they will ever stop full-time work, up from 4% in 2016.
Based on these findings, Retirement Advantage analysis shows that if half of those turning 65 this year chose to stay in work they would contribute £7bn to the UK economy - £1.6bn from those staying in work full-time and £5.4bn from part-time workers.
Contrary to popular perceptions that financial worries are what drive older people to stay in their jobs, when asked2 why they are considering working past state pension age the most popular reason was that they simply like working (54%). The next most common reasons include work providing a sense of purpose (53%) and to avoid boredom (52%). 42% of the over 50s said they wanted to ease into retirement gradually. Needing the extra money comes in fifth (41%), with women more likely to be motivated by this than men (46% compared to 37%).
Andrew Tully, pensions technical director at Retirement Advantage, said: ‘The idea of cliff-edge retirements are put firmly in the past as half the over 50s have no plans to fully retire when the time comes. This generation will continue to make a significant contribution to the economy in the future and employers will need to consider how best to adapt to this changing employment landscape.
‘People clearly enjoy the social aspects as well as financial benefits of work, but there is a cautionary tale in these statistics. A significant minority do not plan to ever stop working, with the number increasing over the last year. This may be perfectly reasonable for some people but it may also reflect a growing pressure to work to be able to pay the bills.’
Retirement Advantage is also warning that plans to work beyond retirement have an impact on pension savings. Research3 reveals that 37% of working people using the freedoms to access cash from their pensions have continued to pay into a pension, while 19% say their employer has. Worryingly, 67% of these people are completely unaware of the Money Purchase Annual Allowance (MPAA).
Andrew Tully continued: ‘People gradually easing into retirement by working part-time may also have taken some of their pension benefits and could find themselves falling foul of the tax rules. Our research shows there is very little awareness of the MPAA which severely restricts the amount you can continue to pay into a pension once benefits have been taken.
‘Getting professional financial advice is a crucial step to ensure your financial plans remain on track, whatever the future may hold.’
- The data in this release is taken from the latest Retirement Advantage Retirement Sentiment Index report, which is based on data from the following sources: 2017 figures: Censuswide survey of 1,005 over 50s, yet to retire, with private or defined contribution pensions, conducted between 28/06/2017 and 29/06/2017. 2016 figures: YouGov survey of 1,001 UK adults over the age of 50, with a DC pension but not yet in retirement. Fieldwork was undertaken between 15/08/2016 and 19/08/2016.
- Source: Survey conducted by Censuswide between 20.03.17 and 22.03.17 of 1,013 over 50 year olds who are yet to retire.
- Source: Research was conducted by Censuswide between 20.3.17 and 22.3.17. Online interviews were conducted among 250 people aged over 55 years who have used the flexible rules to withdraw cash from their pensions since the freedoms were introduced in April 2015.
The Money Purchase Annual Allowance was introduced in April 2015, alongside the pension freedom changes. The MPAA was introduced to discourage people re-cycling tax-free cash from pensions and gaining further tax relief. The current annual limit is £4,000 for the tax year 2017/18.
The estimates on the Gross Value Added of those continuing work past 65 are based on ONS data.