Retirement: thing of the past?

The State Pension is funded by taxing the current workforce and, with our population ageing, is full retirement destined to be out of reach for the average person in a few years time?

The 'Old Age' pension was created in 1908 at a time when the average life expectancy was just 41 years. 

In 1981, a 65-year-old man could expect to live for another 14 years, yet today it's over 21 years, and by 2050 it will be over 25 years.* 

As the State Pension is funded by taxing the current working population, this ever-expanding age group poses a problem for the government.

In response, the UK government is overhauling the pension system - removing what was known as the default retirement age, for instance.

This means your employer can no longer force you to retire at a certain age, an additional flexibility that may help the 50% of retirees who recently admitted they had a funding gap when they finished work.**

MoneyGuide looks at some of the pros and cons of these recent changes:



  • You can make a decision to retire when you are ready.
  • Some companies are now offering financial incentives to encourage people to retire.
  • There is more incentive to continue investing in your professional development and promote skills and experience.
  • If you want to increase your State Pension income, you can defer your claim while continuing to work.
  • Older people are much less likely to take a sick day, even if they are unwell, which is a benefit to employers.
  • Employers also benefit from retaining skills and experience in-house that they potentially would have had to replace.
  • Greater flexibility to cope with circumstances in difficult financial times, such as children staying at home for longer.


  • Some people may experience prejudice in the workplace - either from colleagues or from employers who would prefer that they retire.
  • Companies may find some employees who suffer from ill health or who have not benefited from continued investment in training are not retiring when they previously would have done.
  • Employees may feel pressured into working for longer to maintain a perceived quality of life and support family.
  • Average wages tend to reduce from a high in the mid-30s, meaning the longer you continue to work, the less you may potentially be paid for that work.

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Useful links:

UK Government -

Age UK -

Your Money -

Department of Work and Pensions -

The Age & Employment Network -



* (DWP)

** (Retire-Easy Report, Scottish Widows, January 2011)


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