UK workers taking a more flexible approach to retirement

UK workers taking a more flexible approach to retirement

British workers are opting to work past traditional retirement ages, as well as phasing out full-time work by cutting back hours ahead of retirement, new research reveals.

The research, conducted by Aegon, revealed that UK workers were previously more likely to move straight from work into full retirement, though only half of current retirees are taking this option nowadays.

Steven Cameron, Pensions Director at Aegon, comments: “Many people are choosing to keep working and earning, perhaps by cutting back their hours gradually, even once they’ve started taking their pension.”

Up until 2011, the UK implemented a default retirement age of 65-years-old. As a result, employers could force their staff to retire at 65 regardless of whether the employee wanted to continue working, reports. However, the more recent abolition of the default retirement age gave people greater choice over when to stop work.

“The UK government’s introduction of pension freedoms and banning employers from having a fixed retirement age has made it easier for more people in the UK to choose to work past traditional retirement ages,” Cameron adds.

With this being the case, there are several factors that are encouraging employees to pro-long their working life. 30% were worried about running out of money, while 33% of those surveyed were concerned that their state pension wouldn’t provide them with enough money, which was their main incentive to continue working.

The UK state system entitles those retired workers who have reached State Pension age to receive a regular income from the Government. Pension age is the earliest age that you can start receiving your State Pension.

Under the Pensions Act 2011, women’s State Pension age increased to 65 between April 2016 and November 2018 and this is predicted to increase again by 2020.

Brian Kropp, HR practice leader at Gartner, says to HR Grapevine that analysts point to the need for additional income as the main reason for employees working longer. "For many, this is a reality. However, one of the other major factors why people choose to delay retirement is for social reasons. Many employees keep going to work because that is where their friends are.

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"They like the interactions with their peers and co-workers.  For many employees, one of the fears associated with retirement is losing these key relationships."

Despite harbouring money worries, two of the most common reasons for workers in the UK prolonging work do it to stay active (62%) and because they enjoy going to work (39%).

Furthermore, research from Age UK found that 1.2million people in England aged 65 and over are ‘persistently lonely’ which may also be an incentive for them to keep working.

The Royal College of Psychiatrists says that studies have proven to have generally positive effects of an individuals’ health. Work provides people with social contacts networks and support, it is a constructive way to occupy your time and it gives people a sense of identity and personal achievement.

Chief Medical Officer for England, Professor Dame Sally Davies, tells The Telegraph: “Staying in work, volunteering or joining a community group can make sure people stay physically and mentally active for longer."

"The health benefits of this should not be underestimated.”

She openly encourages those aged between 50 and 70 to continue working or, alternatively, take up new hobbies to keep them physically and mentally active.

Furthermore, the survey showed several cultural differences: UK workers are the least likely to stop work one day and start a life of leisure on the next. This contrasts the approach that many employees in Europe are taking, with 54% of workers in Spain stopping work on a set date, such as a milestone birthday, and 52% of workers in France doing the same. 

James Cumming, Managing Director of executive search firm Re:find, tells HR Grapevine that there is a huge benefit behind retaining older talent and workforces pushing retirement ages back.

“I think there is a huge benefit – quite often people these days think that younger is best but, in many ways, people that have been through this various times, much more than people their junior. They have done it on many more occasions, they have seen what to do and what not do."

"I think to retain the older generation in the workforce can only have a positive impact.”

So, with life expectancy on the increase, there is a far greater need to plan retirement carefully. Sue Andrews, business and HR consultant at KIS Finance, tells HR Grapevine: “Average life expectancy for a woman is now 85.8 years and 82.3 years for men, meaning that you need to think carefully about how long your finances will have to last when deciding when to retire.

She adds: “With life expectancy increasing it’s important to plan carefully for your retirement. Average life expectancy for a woman is now 85.8 years and 82.3 years for men, meaning that you need to think carefully about how long your finances will have to last when deciding when to retire.”

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Comments (1)

  • Sarah Vickerstaff
    Sarah Vickerstaff
    Sat, 28 Jul 2018 4:09am BST
    We need to be careful not to paint an overly optimistic and rosy picture of continuing to work. ALthough people have the 'choice' with no mandatory retirement age many effectively have to carry on working because they cannot afford not to and they cannot afford to retire gradually. FOr people doing heavy work the health benefits may be illusory. PLenty of older workers in hospitality and cleaning continue working with busted knees and hips fearful that taking time off could jeopardise their jobs. WE know that many older people would work if they could find work but after fifty finding a job or changing a job is difficult.

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