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The changing attitudes to working in later life

Tom McPhail

Attitudes to later life employment and to retirement are changing, with increasing emphasis on flexible and part-time employment in the approach to retirement. It is also encouraging to see strengthening recognition of the value and importance of pension saving to pay for retirement. From Hargreaves Lansdown comment Tom McPhail, Head of retirement policy.

However there is a worrying disconnect developing between the needs and expectations of individuals on the one hand, and Treasury pensions policy on the other. With the notable exception of the pension freedoms of 2015, Treasury pension policy is making it harder and harder for ordinary investors to build a decent retirement fund. The most recent announcement (in the Autumn Statement) on the Money Purchase Annual Allowance is particularly destructive in undermining individuals’ ability to make a flexible transition from employment to retirement. This would only worsen if auto-enrolment minimum contributions are raised in the future as is widely anticipated.”

Attitudes to fuller working lives
The ability to work flexible hours (47 percent) was the most popular option when asked what could be done to help keep people working, followed by working part time (46 percent) and moving to a less demanding role (30 percent); Part time work was more popular amongst high earners (51 percent vs 33 percent), while updating skills (22 percent overall) was more popular with lower paid workers (36 percent vs 19 percent); 25 percent said none of the options would encourage them to work longer; 54 percent of Employees thought it likely their ER would allow someone 55 to work flexibly, 34 percent thought it unlikely. Nearly 2/3 of Employees expect to retire in their 60s, and 17 percent in their 70s;

Younger age groups are more likely to expect to retire in their 70s (37 percent of 18-24 year olds); This is not a significant change in the short term, but is over a longer time period – in 2004 only 4 percent expected to retire in their 70s.

Of those who expect to retire at or before 65: 36 percent said this was because they wanted to and just 20 percent said it was because they could afford to. A further 16 percent said it was because they can receive an occupational or personal pension and 8 percent because they could get their State Pension; Note that respondents were only asked to give the ‘main’ reason despite the responses not being mutually exclusive (e.g. being able to afford to and receiving a pension are highly likely to be linked); More men than women answered ‘because they can afford to’, but more women said ‘because they want to’; Of those who have already retired: 39 percent said it was because they wanted to – this is much higher in those with the highest incomes c.f. those with the lowest (49 percent vs 29 percent); Other significant answers are ill health (20 percent), Employer’s policy on retirement age (11 percent), losing job incl. redundancy and firm closing (11 percent) and to look after someone else (8 percent);

Wider pension issues
63 percent of those not retired think putting money in a pension is a good idea (17 percent don’t); Younger people are more likely to agree (71 percent of 18-24 year olds); More people feel their pensions knowledge is ‘reasonable or good’ now than 4 years ago – 47 percent vs 33 percent; 21 percent (down from 38 percent in 2011)  say they know little or nothing – women, young people and lower earners are more likely to be in this group.

Spending on retired people
75 percent believe the govt. should spend more on carers for the sick & disabled; 61 percent want more spent on disabled people who can’t work; 49 percent want more spent on benefits for retired people – the distribution of this is fairly even amongst age groups (so it wasn’t that all the retired people said spend more on us and all the younger people said spend less);

Before this question is asked people are reminded that more spending is likely to mean more taxes.

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