Pension culture changes urged as people ‘work until they drop’ – retirement ages reviewed

Martin Lewis discusses checking state pension underpayments

Pension aged workers are struggling at the moment, with Age UK warning today that a “perfect storm” is on the horizon for many over-50s working in troubled sectors. According to the charities analysis, 340,000 people aged between 50 and 64 are now unemployed, an increase of almost 85,000 in the last quarter (April – June 2020).

Age UK, who sponsored a report into longevity inequality by the Pensions Policy Institute (PPI), also published today, calls for the Government to offer urgent help to those out of work in the run-up to state pension age, who it fears may be permanent casualties of the pandemic.

These calls caught the attention of the interactive investor, who’s own Great British Retirement Survey found one in eight people who are yet to retire think they will need to delay retirement because of the downturn in markets caused by the pandemic, rising to one in five in the 60-to-65 age range.

The same survey also found one in four people had experienced a major life event setback, either through illness, divorce, redundancy, bereavement or caring responsibilities, which had derailed their retirement plans.

Women and people with children were most likely to be affected.

We will use your email address only for sending you newsletters. Please see our Privacy Notice for details of your data protection rights.

Becky O’Connor, the Head of Pensions and Savings at interactive investor, provided the following comments along with the finding: “Unemployment caused by the pandemic is putting some older workers at serious risk of poverty and derailed retirement plans.

“As well as job loss, this age group may have faced added caring responsibilities that have made it harder for them to continue earning.

“Even before the pandemic, major life events such as illness, divorce or caring responsibilities could force people to reduce working hours earlier than anticipated, with a knock-on effect on their retirement income.

“Rises in the state pension age according to life expectancy are out of step with the reality of many people’s lives. Being alive for longer doesn’t correlate with being able to work for longer, because as we age, the chance of all of us experiencing setbacks that make it harder to work is greater.”

DON’T MISS:
Pension scam ‘red flags’ reach highest level on record [WARNING]
Martin Lewis advises on the ‘simplest’ pension for the self-employed [EXPERT]
Martin Lewis helps Retiree gets ‘astounding’ £82k back payment [INSIGHT]

“If, as a society, we continue to believe that people should be able to have some sort of retirement rather than work until they drop, then the Government needs to consider bringing in support earlier than state pension age for those that need it, taking a holistic view of an individual’s ability to return to work in the run-up to the age they can access their State Pension.

“People often start to run into ill health issues in their early sixties. Meanwhile the State Pension age is gradually increasing and will be 67 by 2028. If someone is unable to continue working due to ill-health from the age of 63 and has to stop work early, their pension will have to stretch further.

“For all workers planning their retirement, it makes sense to assume you will stop work earlier than retirement age when planning your finances. This will help prevent any damage done should something like ill health or job loss affect you later on.

“For younger workers, planning to retire earlier, even if they don’t end up doing so, will reduce some of the strain. This might involve, for example, planning to pay off your mortgage earlier, by your early sixties.”

Ian Browne, a pension expert at Quilter, argued allowing early access to state pensions would be in keeping with the government’s commitment to flexible retirement planning.

As he detailed: “As part of the package of responses suggested by Age UK and the PPI it is vital the government consult on flexible state retirement benefits and find a way for people to access their state pension earlier in life at a lower rate.

“Although it is already possible to delay taking state pension income, with the individual receiving a higher state pension income as a result, there is no option to trigger state pension payments to begin at a discounted rate earlier than the state pension age.

“Astonishingly in some parts of the country healthy life expectancy is below 67, which means part of population will never see a penny despite years of work.

“Offering the flexibility to take state pension income earlier is consistent with the move toward greater freedom and choice over retirement lifestyle as heralded by pension freedoms.

“Obviously this will not be a choice that should be taken lightly and we would urge protective measures, such as a requirement to consult a financial adviser or Pensions Wise before exercising this option in order to provide adequate safeguards.”

Currently, the state pension age is sitting at 66.

However, the government currently has plans to increase the state pension age to 68 in the coming years.

Source: Read Full Article