Retirement Age Creeping Closer to 70
According to a report from the Association of Consulting Actuaries (ACA), workers in the UK may have several more years of work ahead of them than previously anticipated. The present retirement age for the firms included in the report is 65 or younger for 90 percent of employees. However, before the end of the decade two thirds of these companies expect employees to retire at 67 or above. By 2028 more than half the companies predict an average retirement age of 68 while a quarter believe employees will be working until age 70 or beyond.
Presently, less than one in ten firms reported an average retirement age above 65 while only 1 percent experience an average retirement age of 70. Under current legislation, the state pension age will increase to 66 between 2018 and 2020, 67 between 2034 and 2036, and 68 between 2044 and 2046.
According to the report:
“The expectation would appear to be that retirement ages will move upwards at a faster rate than the state pension age, meaning more private sector employees will be supplementing their basic state pension by way of continued working, perhaps part-time.
While opinions remain mixed as to whether this trend will impact adversely on the employment of younger people, the importance of smaller firms as the powerhouse in generating new jobs means this is an area of public policy that may need to be examined in more detail as trends emerge. ”
The report goes on to expand on the effect delayed retirement age could have on the younger generations:
“The prospect of later retirement ages may also be deterring younger employees from pension saving – other earlier spending priorities appear much more relevant. This is a situation with some way to run with many younger employees in their 20s and 30s likely to have much larger post-university debts to clear in the years ahead as well as mortgage commitments or high ongoing rents running until later years. ”
Of the 541 firms with fewer than 250 employees surveyed, nearly 40 percent said individuals should have the option to pay a higher rate of National Insurance contributions to secure an earlier state pension. The other 60 percent said individuals who want to retire earlier should make higher private pension savings.
The survey found that less than 60 percent of eligible employees had joined any type of pension scheme, a number down from two years ago when the survey was last conducted. An overwhelming majority of these employees cited high expense as their reason for refusing to join. Other reasons included “lack of interest,” “preference to spend”, and “disillusionment with pensions”+6
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