Ignorance of pensions is preventing extended working lives, ILC-UK survey reveals

It is too often assumed that retirement is a one-off event, rather than a process. Yet there is increasing evidence that we are moving towards a process of ‘gradual retirement’, a concept associated with a wide range of opportunities that may be available to older workers, including downshifting within their current employment, moving into new forms of flexible and part-time work, and self-employment.

Crucially, a process of gradual retirement is far more likely to result in later retirements. However, it is clear that many barriers to gradual retirement remain. A survey commissioned by the International Longevity Centre-UK (ILC-UK), and supported by Aviva, reveals that:

  1. 40 per cent of people would consider delaying their retirement if they could defer the state pension in return for higher payments later – yet 59 per cent are unaware that this option is already available.
  2. 42 per cent of people would consider delaying their retirement if they could combine income from an occupational pension and their current job – yet 66 per cent are unaware that this option is already available to many employees.
  3. 46 per cent of people would consider delaying their retirement if their employer offered greater support for reducing their working hours, or flexible working arrangements.
  4. A lower proportion of people, 36 per cent, would consider delaying their retirement if the state pension age is increased further than already planned. However, this proportion rises to 53 per cent among part-time workers, underlining the importance of ‘gradual retirement’.
  5. 55 per cent of people would support a system whereby individuals could access part of their state pension early, in return for a lower pension when they retire in full.
  6. A large majority of people – 67 per cent – do not support the idea that people above state pension age, yet still in employment, should continue to pay National Insurance contributions.

The results are presented and evaluated in full in ILC-UK’s new report Gradual Retirement and Pensions Policy, which is also published with the support of Aviva. The report recommends that the government should:

  1. Make the positive case for extending working lives much more strongly. At present, many people feel that raising the state pension age is simply about deficit reduction. Many older people recognise the benefits of staying in work for longer, but nevertheless perceive the government’s current strategy as a threat to their hard-earned entitlements.
  2. Consider the introduction of a ‘graduated state pension’. ILC-UK’s survey reveals strong support for a system whereby individuals wanting to downshift could access part of their state pension – even if they would therefore receive lower pension payments when they retire in full.
  3. Better promote aspects of the pensions system that encourage longer working lives. This applies, in particular, to state pension deferral. It seems many people would stay in work if they could defer their state pension, but are unaware that this option already exists.

Baroness Sally Greengross, Chief-Executive at ILC-UK said “We know that financial circumstances play a huge part in retirement decisions, and so the pensions system is clearly having an impact on the path to retirement that is chosen by individuals. But retirement should be seen as a process, not an event. We must do whatever we can to increase the options available to workers entering later life, so they are able to continue contributing to the economy in a sustainable way.”

Clive Bolton, ‘At Retirement’ Director at Aviva said: The government’s move to abolish the default retirement age means that fewer people will be forced to give up work.   As a result, we expect to see people working until later in life and having a wider array of retirement choices.  However, the availability of employment and the flexibility offered will rely on the economic climate of the time, so some people might find it harder than others to keep working in later life.

“Our own Real Retirement Report recently showed that most people see the final ten years before they retire as the main opportunity to build up their pension pots, yet 40 per cent of over-55s experience a significant career disruption over this period. As a result we are seeing the rise of downshifting whereby people continue to be economically active in retirement and gain the financial and social benefits of employment. It is therefore crucial that retirees are supported in choosing how and when they finish their working lives .”

Dr Craig Berry (report author) at ILC-UK on 02073400440. Or email


Notes to Editor:

  1. Gradual Retirement and Pensions Policy will be available on the ILC-UK website on 22 November 2011. Advanced copies are available for the media.

  2. The production of Gradual Retirement and Pensions Policy has been supported by Aviva.

  3. The International Longevity Centre-UK is the leading think tank on longevity and demographic change. It is an independent, non-partisan think-tank dedicated to addressing issues of longevity, ageing and population change. We develop ideas, undertake research and create a forum for debate. The ILC-UK is a registered charity (no. 1080496) incorporated with limited liability in England and Wales (company no. 3798902).

  4. Dr Craig Berry is a Senior Researcher at ILC-UK and the author of The Future of Retirement (2010), Resuscitating Retirement Saving: How to Help Today’s Young People Plan for Later Life (2011) and Financial Citizenship: The State’s Role in Enabling Individuals to Save (forthcoming). He also lectures on economic policy at the University of Warwick. He worked previously as a Policy Advisor on Older People and State Pensions at HM Treasury, and completed his PhD at the University of Sheffield in 2008.


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