14 May 2004 - Publication of DWP research report:
Working after state pension age: qualitative research
Research published today by the Department for Work and Pensions explores the decisions people make about work and retirement when they reach State Pension Age (SPA), the factors influencing those decisions and what policies might support and encourage those who wish to continue working.
The research is the second of a two-part study. The first part “Working after State Pension Age: Quantitative Research by Deborah Smeaton and Stephen McKay, DWP Research Report 182” was published in February 2003. The study was undertaken because little was known about the 8 per cent of men over 65 and 10 per cent of women over 60 who continue to participate in paid work (LFS Autumn 2003). The research was carried out on behalf of the DWP by the Policy Studies Institute.
The main findings from the qualitative research are:
Work histories, careers and orientations to work
- Those interviewed covered a diverse range of occupations and working patterns, reflecting differences in local labour markets, class and gender. Over half of those interviewed had been self-employed for all or part of their working lives, many had moved in and out of different types of paid work and / or spent time out of work while others had spent their working lives in a single occupation or career.
- Interviewees’ participation in paid work was influenced by their partner’s involvement in the labour market. Those who lived alone experienced a particular impetus to maintain economic activity in later life.
Financial planning and income in retirement
- The extent to which interviewees had planned or were able to plan financially for retirement, and their subsequent or anticipated incomes after leaving paid work varied considerably, and reflected differences in disposable incomes, occupation and orientation to work.
- Those who had been on low incomes for much of their working lives tended not to have engaged in a high degree of financial planning, whether because they had not anticipated the devaluation of state pensions, because their workplaces had not offered occupational pension schemes, or because their incomes had been too stretched to save or invest for the future.
- Women often possessed broken National Insurance contribution records, linked to career breaks and to part-time working, which reduced their state pension entitlements. Several divorcees saw their financial expectations for retirement reduced, and people who had been made redundant unexpectedly sometimes experienced particular hardship and had to adjust their expectations in terms of reduced retirement incomes.
- However, even when people did plan for their retirement, this did not always result in better financial outcomes, as many self-employed interviewees who had invested in personal pension schemes discovered. However, others started to plan for retirement early on, combined personal and occupational pension contributions, were ‘lucky’ in their investments, or received generous redundancy payoffs, and found themselves comfortably provided for in retirement.
- Occupational pensions appeared to offer the most security for retirement, but were not available in all workplaces or to people who had been self-employed. A number of interviewees also referred to the lack of portability of occupational pension schemes in changing jobs. Most people had received limited or “ad hoc” financial advice about planning for retirement, and where people took more formalised routes, great emphasis was placed upon utilising ‘trusted’ sources, such as local bank or building society managers with whom they had an existing relationship and many of the self-employed sought advice from their accountants, rather than independent financial advisers.
- Property owners often felt their homes gave them a degree of financial security in retirement, particularly where they had benefited from localised property booms, and a number of interviewees had or planned to re-mortgage to obtain capital for their retirements. Some self-employed people also had businesses they could sell, although for others these had little resale value as going concerns.
Policy options to support post-SPA working
The research was designed to explore the ways in which policy could support individual choices about employment in later life. Research participants were asked to discuss and priorities possible policy initiatives. It emerged that the favoured policy initiatives to support those wishing to continue working were: campaigns to challenge negative attitudes towards older workers; legislative changes such as abolishing compulsory retirement; financial incentives to encourage people to continue working; and additional advice and information and advocacy for those at or approaching retirement.
Notes for editors
- The first stage of this research – “Working after State Pension Age: Quantitative Research by Deborah Smeaton and Stephen McKay, DWP Research Report 182” – was a quantitative study designed to further understanding of the factors affecting the labour market participation of older people at, and particularly after SPA through secondary analyses of the Labour Force Survey, Family Resources Survey and British Household Panel Survey. The quantitative research examined the circumstances under which people work after SPA, the types of jobs they have, and the impact working post-SPA has on the health, wealth and happiness of the working population, compared with the non-working population.
- The second stage of the research is based on twenty four depth interviews and five small discussion groups which were carried out in three contrasting locations; London, Dorset and Bradford. These areas were chosen because the population of each includes a significant proportion of people over SPA and the areas display distinctive working patterns and / or employment opportunities for people after State Pension Age.
- DWP Research Report: 208 – “Working after State Pension Age: Qualitative Research ”by Helen Barnes, Jane Parry and Rebecca Taylor is published on 14 May 2004. A summary and copy of the report are available on the DWP website at www.dwp.gov.uk/research or via the Age Positive website at www.agepositive.gov.uk.
- This report is part of the government’s age research programme, which supports the Age Positive campaign. Details of the campaign can be found on www.agepositive.gov.uk.
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