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01 Nov 2017

Half of the over-50s plan to stay in work

New research has found that half of the over-50s in the UK plan to keep working after they reach state pension age.

The survey for Retirement Advantage revealed that 49% want to continue working in some form after reaching retirement. Of these, 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.

Across the country, this equates to 5 million over-50s who plan to carry on working, with 300,000 working full-time hours.

Retirement Advantage calculates 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.

When asked 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 included work providing a sense of purpose (53%) and to avoid boredom (52%), while 42% said they wanted to ease into retirement gradually. Needing the extra money was in fifth place (41%), with women more likely to be motivated by this than men (46% compared to 37%).

Commenting on the findings, 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 also highlighted the fact that many pension savers don´t know about the Money Purchase Annual Allowance (MPAA), which was introduced in order to limit the extent to which pension savings can be ‘recycled´ to gain further tax relief. The current annual limit is £4,000 for the tax year 2017/18.

A separate survey for Retirement Advantage found that 37% of working people over 55 who have used the pension freedoms to access cash from their pensions have continued to pay into a pension, while 19% said their employer has. Yet two thirds (67%) of these people are completely unaware of the MPAA.

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.”

Copyright © M2 Bespoke 2017

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