DEATH OF EARLY RETIREMENT

Number quitting before 65 falls by a quarter in seven years

EARLY retirement is becoming a ‘fantasy’ for millions of workers, experts warn.

Higher life expectancy, the demise of final salary pensions and a rising state pension age mean the number of people retiring before 65 has fallen by a quarter in only seven years.

Pensions experts are predicting ‘the death of early retirement’ as all but a lucky few work into their 70s.

In a bleak assessment, savings giant Aviva said that by 2035 almost no one will give up work before the age of 65.

Tom Selby, a senior analyst at investments firm AJ Bell, said last night: ‘This will be a brutal reality check. The idea of stopping work early is fast becoming a fantasy.’ The warnings came as: A senior official at the Department for Work and Pensions (DWP) said hundreds of thousands of over-50s may need to return to work because they will not have enough to live off in retirement;

Employment minister Alok Sharma revealed the UK Government wants employees to be offered ‘mid-life MoTs’ to tell them how long they have to stay in work to have a comfortable retirement;

MPs were told of plans for a ‘National Retraining Scheme’ to ensure older workers adapt their skills.

Office for National Statistics figures yesterday showed the number of under-65s in retirement has fallen by 433,000 in the past seven years, from a peak of nearly 1.6 million in 2011 to under 1.2 million today.

The report also showed a record 10.1million over-50s are in work, including 1.2million who are over 65.

There were fewer than 700,000 over-65s in work

ten years ago and only 434,000 in 1998. Former pensions minister Sir Steve Webb blamed the demise of final salary pension schemes that offered workers a decent income in retirement.

He said: ‘Final salary pensions were very often the means that someone could take income enough to live on at 55, but fewer and fewer people are now reaching that age with such a pension.’

It is also thought some parents are unable to retire because of supporting their families – particularly children who need the help of the ‘Bank of Mum and Dad’ to get on the housing ladder.

The state pension age for women is rising to match men at 65 and will increase to 66 for everyone by 2020 before rising further. Government actuaries believe it will reach 70 in the 2050s and 71 in the 2060s.

Alistair McQueen, head of savings and retirement at Aviva, said that by 2035 there may be almost no one giving up work before the age of 65. That would mean nearly everyone born after 1970 will work beyond their 65th birthday.

He predicted: ‘We could see the death of early retirement by 2035.’

Duncan Gilchrist, deputy director of ‘fuller working lives’ at the DWP, said there was a need to raise the ‘financial awareness’ of people in middle age.

He said the Government wanted to ‘work at getting people fit enough to work for longer’ – and to allow people to work more flexibly as they get older.

The National Retraining Scheme would be a ‘mechanism’ to try to make sure that of the UK’s workforce, the people who do not have current relevant skills are able to go to sectors where their skills can be upgraded, he added.

Mr Sharma said the DWP would bring out more details on proposed mid-life MOTs later in the year.

Baroness Ros Altmann, a former pensions minister, said: ‘It is good for the economy that if people want to work longer then they can do so.

‘But there are a lot of older people who are already not well in their early 60s and if they feel forced to work, that is not going to be good for them.

‘We need to have enough flexibility in our pension system to help people who are desperately ill to get a pension early, even if it’s at a reduced rate, so they don’t have to work on.’

A DWP spokesman said: ‘People are living longer, healthier lives and many are choosing to stay in work. Doing so is good for their wellbeing and means they continue to receive a wage while saving more for their future.

‘We’re supporting businesses to recruit, retain and retrain older workers so people who want to work later in life have the opportunity to do so.’