Gradual retirement and pensions policy

Document type
Berry, Craig
International Longevity Centre - UK
Date of publication
1 November 2011
Older Adults
Social welfare
Material type

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Gradual retirement is not simply winding down, but rather a way for older workers to develop sustainable ways of engaging in the labour market. However, it seems that various barriers to gradual retirement remain. This report is focused on the role that pension provision may play in constraining and enabling gradual retirement. In terms of both workplace/employer pensions, and especially state pensions, are the incentives to defer payments strong enough? Are the procedures for combining work and pension receipt adequate? Pension provision may therefore hamper gradual retirement options even where demand exists. This report draws upon the results of a survey commissioned by ILC-UK in September 2011, undertaken by GfK NOP, designed principally to assess whether individuals themselves perceive of certain aspects of the pensions system as barriers to both gradual retirement and working for longer. It also draws upon two other main sources of evidence: 

• Existing evidence contained in Aviva’s Real Retirement reports and data from the Labour Force Survey published by the Office for National Statistics. 

• A roundtable meeting held in the House of Commons on 24 October 2011, attended by a large number of experts and stakeholder representatives. 

The report begins by briefly surveying the existing evidence on retirement and employment in later life, noting the discrepancy between expectations of retirement and actual practice. The remainder of the report presents the results of ILC-UK’s survey. The second section presents evidence on the circumstances in which individuals would consider delaying their retirement. The third section focuses on the state pension, presenting evidence on state pension deferral and the possibility of a ‘graduated state pension’. The fourth section presents evidence on individuals’ awareness of the possibility of combining income from employment and a workplace/employer pension, and the final section looks at the issue of National Insurance contributions by older workers.

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