23rd February 2015
Working just five years beyond state pension age could boost income from retirement savings by a third claims a new report.
The Finance Portfolios of the Future, a study published today by insurer Friends Life following research commissioned by The Pensions Policy Institute found that by deferring a state pension for five years and continuing to work full time, thereby continuing to contribute to private pension savings, retirees could see weekly income from retirement funds rise by 33%.
For those in the lowest quartile of private pension savings, this increase will take weekly pension income from £156.90 per week to £208.80 once they have given up work.
This would lift them above the average £200.88 weekly living costs during retirement, making up a shortfall that would otherwise make their retirement a much greater financial struggle.
Andy Curran, UK chief executive, Friends Life said: “It’s really positive to see that people can make such a difference to their pension saving by working a relatively short amount of time beyond the State Pension Age. The retirement world is changing and people are taking the decision to work for longer.
“This is why it is so critical to understand the full impact this will have on retirement income and our new study uncovers how continuing to work for just a few more years can help consumers take back more control. To really make the most of retirement income, both government and the pension industry have a responsibility to help people review their options and the implications of continuing in work.”
Chris Curry, director, Pensions Policy Institute added: “This report unpicks the impact of changing work life on retirement income. By using data from the English Longitudinal Study of Ageing we have been able to take actual individuals and model how their pension incomes might change right the way through retirement if they behave in different ways. This has revealed that working up to and beyond state pension age, for those who can and want to do this, offers a real alternative to saving more or having a lower than ideal income in retirement.”