What are the key reasons for shifting retirement patterns?

New pension rules which give you far greater flexibility over what you can do with your pension pot came into force on 6 April 2015, but according to Aviva’s latest Working Lives report a third of people aged over 50 who are employed in the private sector are now planning to retire later than they previously hoped.

The 2016 report – which comprises research among UK private sector employers and employees – has a particular focus on employees aged over 50, following the end of compulsory retirement and with the first anniversary of the ‘pension freedoms’ approaching.

In particular, it asked people, before they turned 40, what age they hoped they would retire at. Now, aged over 50, more than one in three (36%) admitted they would be retiring later than they thought – by an average of eight years.

Primary reasons for late retirement
Among those who will now retire later than hoped, the report found that a lack of pension savings (46%) is the primary reason for people to postpone their retirement plans. If you wish to seek independent financial advice to ensure that when you are due to retire you have enough in your retirement fund. We at Hutt Professional have financial advisers with many years of experience who would be able to offer you the independent financial advice you need.

The second most common reason for working longer was the amount that would be available through the State Pension (32%), making it clear that affordability is a real issue for a high proportion of over-50s.

Not all the reasons given for working longer were negative, though, with one in five (21%) of those expecting to work longer doing so because they feel they still have a lot to offer their employer. A similar proportion (20%) said that job satisfaction has encouraged them to put off retirement.

Pension reforms
The Working Lives report also reveals a gap between employers’ and employees’ views on the impact of the pension freedoms following the recent first anniversary of their introduction in April.

Over one in five (22%) employers think the freedoms could result in their employees having to work longer to make up for a shortfall in savings if they use part of their pension before retirement. At the same time, almost one in three (32%) employers are concerned they will lose valuable skills because people will retire earlier due to the freedoms.

However, these fears may be unfounded as the vast majority of employees aged 50 and above do not intend to alter their plans because of the pension reforms. Only 8% highlighted that the freedoms will result in them retiring earlier, contrasting with the concerns employers have around loss of skills.

One in ten (11%) employees over the age of 50 now think they will retire at a later date because of pension freedoms, while 9% still remain unsure as to what the eventual impact of the freedoms will be upon their retirement plans. Seven in ten (71%) stated they have no plans to retire or that the pension freedoms have not affected their expected retirement date.

If you wish to seek independent financial advice to ensure you will have enough funds for retirement , we at Hutt Professional have financial advisers with many years of experience who are also highly qualified who would be more than happy to offer you the independent financial advice you need. If you are located in Leamington Spa or surrounding areas and wish to seek independent financial advice please do not hesitate to contact us.

 

Source:http://www.goldminemedia.co.uk/   04/05/2016