As the government encourages employees to work longer, what will the impact be on retirement?
Last week, the government launched the Fuller Working Lives report as part of a long-term strategy to encourage Brits to work longer: to “ensure [employers] are not writing people off once they reach a certain age, helping to build a country that works for everyone.”
With estimates that by mid-2030s more than half of the UK adult population will be aged 50 and over, ministers have set out a strategy to support older workers, recruit older talent, and retain them in the workforce.
Secretary of state for work and pensions Damian Green comments on the report: “Most people are healthier for longer and so are able to extend their careers and take up new opportunities. Staying in work for a few more years can make a significant difference not only to someone’s income but also their physical and mental health.
“I urge all businesses to reassess the value of older workers. Nobody should write off hiring someone due to their age and it’s unacceptable that some older people are overlooked for roles they would suit completely.”
With the abolition of the default retirement age and the advent of the right to request flexible working, the process of working later has been made far easier for the older generations in the workforce: but what do employers need to consider?
The Fuller Working Lives strategy points out that “by delaying retirement until 65 instead of 55 someone with average earnings could have £280,000 extra income and might increase their pension pot by 55%.”
It is key that older workers considering their retirement date should understand what pension provision they already have in place, and what they think they will need for a suitable retirement – so financial education has never been more crucial.
Jonathan Watts-Lay, director, WEALTH at work, a leading provider of financial education in the workplace, supported by guidance and advice, comments: “Employees need to receive suitable support in the workplace particularly at-retirement when there is a risk that they could make poor decisions leading to reduced income. I am pleased to see that employers and trustees are increasingly managing the risk for themselves and the employee by ensuring they put in place ‘retirement specialists’ who can guide, advise and implement options that are available under the new regulations. For some this may involve working longer whilst saving a bit more, whereas others will be able to retire with enough income from their pensions and other savings in a thought through retirement plan, specifically prepared for them.
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