Millions of UK mid-life employees (32 percent – the equivalent of 4.5 million) believe they may not have enough money to retire when the choose to, according to research by Aviva. Following the survey, Aviva is calling for the government to enable a “phased approach” to retirement.
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The international savings, retirement and insurance business launched its report “The UK’s Mid-Life Workforce: navigating uncharted waters” today, calling on the government and industry to see investment in mid-life employees as a “need to do” – rather than a “nice to do”.
Aviva suggested flexible withdrawals of the state pension form the age of entitlement would remove the “all or nothing” choice which millions of workers face.
It would allow people to claim a portion of their state pension, upon reaching their state pension age.
Aviva suggested the unclaimed about would then increase in line with traditionally deferred state pensions.
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State pension age is in the spotlight in a new report by Aviva (Image: GETTY)
However, the company said that with this proposed increased flexibility and choice, there would be an even-greater need for guidance and regulated financial advice.
With the state pension age rising and a shift towards defined contributions schemes, Aviva says almost half (49 percent) of UK employees who are aged 45 or older are considering working for longer or are already working beyond state pension age.
Lindsey Rix, CEO UK Savings and Retirement at Aviva said: “There are several actions the government and employers could consider to better support workers in the 45+ age group.
“We believe the choice between claiming zero percent or 100 percent of the state pension no longer reflects our increasingly flexible working lives and we are calling on the government to allow individuals to make flexible withdrawals from their state pension when they reach their state pension age.
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“As a leading provider, we are also committed to helping deliver better help and support for customers.
“We want to work with the government and regulators to make sure that suitable advice is accessible and affordable for the majority, within a properly regulated framework.
“The number of mid-life employees continues to grow to unprecedented levels. Aviva has learnt a huge amount about the challenges and opportunities facing this population from the delivery of our Mid-Life MOT programme.
“Our report shows there is a huge demand for a fuller working life amongst those aged 45+.
“However, we believe the state pension age acts as an artificial ‘hard line’ in the working lives of many.
“If we fail to prepare for an ageing workforce, the consequences will be damaging for generations to come.
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“Not only could we see an increase in poverty in retirement; but also, a greater strain on our working population and a UK restricted from investing in its future as it struggles to navigate its present.”
Elsewhere today, Aegon joined Aviva to call for more flexibility in the state pension – but instead focused on proposing there be an option to take the payment early – subject to a reduction in the weekly amount.
Steven Cameron, Pensions Director at Aegon, said: “In the private pension space, pension freedoms have proved hugely popular in allowing people to take more control over when they start drawing their defined contribution pension and how much they take as their retirement progresses.
“But this is not mirrored in the state pension where despite the state pension age increasing there is no flexibility to choose to take it early.
“The plight of the WASPI women has shown the hardship caused by having to wait longer for the state pension to kick in.
State pension age: Aviva has proposed a ‘phased retirement’ in the new report (Image: GETTY)
“We would like the Government to explore allowing people to take their state pension from an earlier age, perhaps 63, at a reduced amount to reflect the fact it is starting earlier and will be paid for longer.
“The older the state pension is, the more difficult it will be for those in stressful or manual occupations to keep working until state pension age.
“Offering early access at a reduced level could be a big help to many thousands.
“There is a need to make sure people don’t end up with an income from state and private pensions below the means tested benefit level.
“So some checks and balances might be required. But with some creative thinking this issue shouldn’t be insurmountable and should be well worth the prize if it helps many people with their transition into retirement.”