There has been a big shift in firms' expectations of the typical retirement age of employees over the next decade or so as state pension age is raised, according to a report by the Association of Consulting Actuaries.
The third Interim Report of the 2016 Smaller Firms Pension Survey showed a significant shift in the percentage of firms where employees are typically retiring at age 66 or above - 35 per cent as opposed to just 8 per cent two years ago, with the change most marked in firms with less than 50 employees.
Two years ago, just 4 per cent of firms expected typical retirement ages to rise to above age 67 by 2020, by when state pension age increases to age 66.
Five times as many - 20 per cent of firms - now expect typical retirement ages to rise to above 67 by then.
According to the Aca, these findings suggest that small firms are expecting more employees to want to work on beyond current retirement ages with the pace of change in ‘working-on’ moving more quickly than the increases in SPA.
Aca chairman, Bob Scott said: “Improving life-spans are clearly a boon, but they have placed considerable strains on the pension system and employers; and stretched many individuals’ personal finances over the last few years.
"Our findings suggest smaller firms are increasingly looking to retain, or are expecting to have to retain, many more employees beyond State Pension Age, potentially boosting the incomes of this group.
“However, conversely, the relative rapidity of change is likely to further exacerbate the intergenerational challenges that are increasingly being highlighted in the media and beyond."
Recent Office for National Statistics data showed the number of those staying on at work past the state pension age has been climbing at some pace.
This has been explained largely by the financial pressures on those approaching retirement, not least because of much reduced income from private savings and annuities in a low-interest rate environment.
In terms of firms' forecast of typical retirement ages in their businesses as state pension age increases over the next decade or so, there has also been a big shift.
According to Aca, the changes suggest many employers expect typical retirement ages in the smaller firms' sector will out-pace the increases in state pension age.
When state pension age rises in 2028 to age 67, some 36 per cent expect typical retirement ages to be a pace ahead at age 68 or above.
It is employers with fewer than 50 employees who expect the biggest leaps in typical retirement ages. This is likely to be related to the lower earnings prevalent in smaller firms – for example, 42 per cent of employees in micro-employers (one to four employees) earn less than £10,000 per annum.
ruth.gillbe@ft.com
