The 14 Words

Thursday, 2 January 2014

Millions will have to work beyond 75 say bosses

The extent to which millions of people will soon have to work beyond the age of 75 is laid bare in a report today.

At present, 80 per cent of workers retire by the age of 65, but by 2020 this is expected to have dropped sharply to 35 per cent. By 2028, this will have fallen further to just 15 per cent, predicts the Association of Consulting Actuaries (ACA).

Work 'till you die, that way you pay all your life and the government 
don't need to give you anything back

The trend to work until later in life is being fuelled by the Government’s plans to raise the state pension age, which is currently 65 for men and 61 and nine months for women. It is scheduled to rise to 66 for both men and women by 2020, rising again to 67 by 2028, reaching 68 in the ‘mid-2030s’ and 69 by the ‘late 2040s’.

The ACA, which represents pension experts, asked employers when their workers ‘typically’ retire at the moment and how they expect this will change in the future.

Forty per cent of the bosses said that by 2028 their workers would retire between the age of 66 and 67; 26 per cent between 68 and 69; 9 per cent at 70; 8 per cent between 71 and 75 and 2 per cent ‘over the age of 75’.

Not a single one of today’s bosses said their worker’s ‘typical retirement age’ now was 70 or over.
‘Private sector employers are expecting to see “typical” retirement ages from work to change quite markedly in the next 15 years,’ 
Said the report by the ACA, which questioned more than 300 bosses from firms with workforces ranging from one to 5,000.

For many workers, their retirement plans are hit by their boss’s decision to downgrade their company pension scheme from a gold-plated option to cheaper alternatives.

In 2003, just 9 per cent of ‘defined benefit’ pension schemes, such as a final salary scheme, were closed to firms’ existing workers as well as new joiners. 
By a decade later, the number had ballooned to 36 per cent, with bosses typically blaming the crippling cost of such schemes.

For example, a boss and the worker typically pay a total of 21.9 per cent of the employer’s salary into a defined benefit pension, but only about 6 per cent into a cheaper alternative, known as a ‘defined contribution’ scheme.

To make matters worse, the ACA report predicts bosses plan to pay even less into their workers’ pension schemes in coming years. It blames the huge extra cost to firms from the Government’s new ‘automatic enrolment’ rules, which mean they must pay into a pension for all their workers.

Around 1.9million workers, aged between 22 and the state pension age, have been automatically enrolled since the rules were introduced in October 2012. Average contributions into defined contribution schemes will decline ‘perhaps quite considerably’ over the next few years, added the report.

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