Pension plight of millions forced to quit jobs too early
MILLIONS of workers have been forced out of the workplace before they planned to retire with serious consequences for their pensions.
As many as 10.6 million people have had to give up working because of poor health, redundancy or family responsibilities and then had to cut back or stop saving for their old age.
Only 51 per cent managed to retire at their target age, research by pension specialists Aegon has found.
Those forced to give up work early face a longer period with no state pension to draw on, and a reduced pension size due to lost contributions. The report also points out the risks of cashing in pension savings early.
Officially, 444,000 men and 454,000 women – a record – will turn 55 this year.
Pension policy changes in 2015 allowed savers to cash in all or some of their pots at 55. In the first year, £4.4billion was withdrawn and figures for this year are likely to be even higher, with £3.3billion taken out in the first six months alone.
Stephen Lowe, of financial services company Just, said those thinking about drawing down some of their savings should be aware that they may not be able to work for as long as they hoped.
“The financial consequences are likely to be magnified as people now have the option of getting at their cash earlier but may have to wait longer to claim the state pension,” he warned.
The Aegon study found that the average age at which people want to retire or cut down their hours is 64.
But with such a high number of those retired (38 per cent) effectively forced out of the workplace by circumstances beyond their control does not bode well for future generations of staff facing illness and redundancy. Yet they face an increasing state pension age which means many will need to work longer.
Aegon said the report has important implications for the review of state pension ages which former CBI chief John Cridland is undertaking for the Government.
Steven Cameron, of Aegon, said: “With the concept of a fixed retirement date fast disappearing, people no longer excitedly count down the days until they [finish]. Indeed, an increasing number relish the opportunity to stay actively in work.
“With the likelihood of further state pension age increases, a growing proportion of people will simply be unable to stay in work until their state pension kicks in.”