Calls for graduated state pension
Published 22/11/2011 | 00:12
The Government should consider introducing a "graduated" state pension to allow people to draw some cash before they retire - which could help encourage them to continue working for longer, a think tank has recommended.
The International Longevity Centre said that while many people understand the benefits of remaining in work for longer, they perceive the Government's current strategy as a "threat".
Its Gradual Retirement and Pensions Policy report, which used a survey of 1,000 adults to form part of its findings, said that 55% of people supported the idea of a "graduated" state pension, whereby people approaching retirement could begin receiving part of their pension in order to reduce the number of hours they work.
In return, this was likely to mean they would receive lower payments when they fully retired.
The report said: "There is strong support for graduated state pensions, and therefore the Government should explore the possibility that it will lead to longer working lives. It may be possible to limit the graduated state pension to individuals in certain circumstances, that is, those in danger of leaving the labour market entirely."
Think tank officials also uncovered a lack of awareness about pensions which they said was preventing people from extending their working lives.
The report said that 40% of people would consider delaying their retirement if they could defer the state pension in return for higher payments later - yet 59% were unaware that this option is already available and it called on the Government to make the positive case for working for longer more strongly.
The Government announced changes last month to the planned increase in the state pension age, saying that tens of thousands of women would benefit at a cost of more than £1 billion. It said a plan to raise the state pension age to 66 in 2020 would be delayed by six months from April 2020 to October 2020.
However, unions said the move gave "precious little comfort" to women while experts warned women's pensions plans would be thrown into disarray.
A Department for Work and Pensions spokeswoman said the Government had already increased flexibilities around retirement by abolishing compulsory retirement at 65. "Meanwhile, the state pension is already graduated. It may be taken at any time after state pension age, and the Government offers generous incentives to those people who take their state pension later," she added.