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Stephen Lowe, Just Group
Stephen Lowe, Just Group

Study finds that nearly two thirds of employees retire before reaching state pension age


Research compiled by retirement specialists Just Group has revealed that nearly two thirds of those who are aged over 55, retired prior to reaching the state pension age of 66.

Its Countdown to Retirement survey found that 62 per cent out of 1, 050 respondents who are 55 and over, said that they would leave the workforce before they received their state pension.

While just over a third of those who retired before they reached state pension age, said they withdrew money from their pension, between the age of 55 and finishing full-time work.

It’s a growing pattern that has raised concerns over the sustainability of individuals’ pension funds.

Data from the Financial Conduct Authority’s (FCA) retirement income market data discovered that 40 per cent of income drawdown plans were being withdrawn at an annual rate of 8 per cent or over, with 13 per cent seeing regular withdrawals of

6-7.99 per cent.

Accessing pension pots early has become a new normal after new flexibility rules were introduced in 2015, the FCA said as part of its Retirement Outcomes Review released two years later.

The reform was a turning point as before they were introduced as people tended to take their defined contribution pensions out as they retired, which was often but not always at or close to the state pension age.

Increased pension flexibility is an attractive proposition, as it allows people to manage adverse circumstances such as periods of unemployment or poor health where financial difficulties would not be fully covered by state benefits.

There are many reasons why people have decided to leave the workplace.

Stephen Lowe, the group communications director at Just Group says: “Aside from those who retired earlier than they expected due to having sufficient pension savings, it seems rather that people are forced out of work due to redundancy or illness, or to become a carer.”

There is also the perception held by retired people is that it’s harder to get back into the workforce once you have left it, according to Just Group research 55 per cent agreed that employers are less open to employing older workers, with only 17 per cent disagreeing.

The group also found that 69 per cent of men compared to 55 per cent of women retired after the age of 55 before receiving the state pension,

This is most likely due to a pensions gender gap, as the government has estimated that there is a 35 per cent difference between men and women over private pension wealth at the set retirement age.

Seeking guidance over pension wealth is strongly advised by the group, while professional advisers are recommended there is also impartial advice on offer from the government service Pension Wise.

The group found in its study that just 7 per cent turn to an independent financial adviser over their pension situation, while a smaller 5 per cent used the free of charge Pension Wise.

Lowe says: “Attempts to boost take-up of Pension Wise guidance haven’t been successful. Access to professional advice for ‘Middle Britain’ retirees is a concern, traditional advice firms tend to target the wealthier end of the market.”

It is also anticipated that technology is going to play a key role in the provision of low cost regulated advice that may reach a wider market, through online ‘robo-advice’ and hybrid services.

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