Over 60 per cent of workers are worried about the prospect of a longer working life to support themselves through retirement as research showed the population of employees working beyond the age of 50 was growing.
Research from Aviva, published yesterday (September 12), found the equivalent of 20m working people in the UK are concerned about having to work longer due to not having sufficient pension funds to be able to retire, and a continuous rise in the state pension age.
The department for Work and Pensions yesterday reported a record number (10.6m) of workers over the age of 50, a rise of 32 per cent (2.6m) over the past decade.
The data showed in the age group 35-49 nearly nine in ten adults (85 per cent) are currently working but this drops to five in ten (56 per cent) by the time people reach the 60-64 age group.
Some of this population may have chosen to retire early, but many will have not, according to Aviva.
The rise in the state pension age also plays a role in people having to work longer as it is the largest single source of income in retirement (43 per cent) for the average pensioner.
State pension age has been set at 65 for men since 1925, and was equalised for women last November.
It is set to rise to 66 by 2020, 67 between 2026 and 2028, and 68 between 2044 and 2046.
Alistair McQueen, head of savings and retirement at Aviva, said although people had to continue working to support themselves, the data showed many were struggling to do this, meaning they may be worse off in retirement.
Mr McQueen said: “As the state pension age rises, millions of workers will seek to keep working through their fifties and beyond. But the continuing fall in employment participation as we age suggests many are struggling in this endeavour.
“For individuals, this represents a loss of earning capacity which will negatively impact their income in retirement.
“For UK plc, this loss of participation represents a huge loss of talent, skill, expertise and experience. For the UK to thrive, we must capitalise on the talents of all, regardless of age.”
The DWP's data also showed a significant increase in the number of women working into their 60s with more women now in employment between age 60 and 65 than not.
Quilter head of retirement policy Jon Greer said: “Changes to the state pension have evidently had a significant impact on working patterns, particularly among women.
"In the 90s and 2000s, women were, on average, retiring from work in their early 60s, but that has steadily crept up and the average age of retirement is now just over 64 years old – the highest it has ever been.
“Further increases in the state pension age are already scheduled in, with retirees having to wait til age 68 before receiving their state pension benefits.
"This change is currently expected in the late 2030s if parliament passes the required legislation, but it could easily be brought even further forward in the future.”
Last month (August 19), a think tank suggested that the state pension age should increase to 75 by 2035.
The proposal – which also included raising the state pension age to 70 by 2028 – was made by the Centre for Social Justice, chaired by Iain Duncan Smith MP, former secretary of state for Work and Pensions, to tackle the challenges posed by an ageing society to the UK’s fiscal balance.
Mr Greer added: “The gradual increase in the state pension age is driven by demographic changes. An ageing society that means there are fewer and fewer working age people for every person in retirement.
“In the context of the state pension, that creates an acute funding challenge because the state pension is run on a pay-as-you-go basis, with the government paying the state pension directly from tax revenues.
“And it is crucial to recognise that the long-term trend underpinning all this is that the government is growing less able to support retirement funding, gradually increasing our own individual personal responsibility for meeting the cost of retirement.”
amy.austin@ft.com
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