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 thinktank recommended today.
The International Longevity Centre (ILC) says that while many people understand the benefits of remaining in work for longer, they perceive the Government's current strategy as a "threat".
- Government should consider a graduated state pension
- People could draw cash before retirement and reduce working hours
- New report says 55% of people support the idea
Its Gradual Retirement and Pensions Policy report, which used a survey of 1,000 adults to form part of its findings, says that 55% of people supported the idea of a "graduated" state pension, whereby people approaching retirement can begin receiving part of their pension in order to reduce the number of hours they work.
In return, this is likely to mean they would receive lower payments when they fully retire.
"There is strong support for graduated state pensions, and therefore the Government should explore the possibility that it will lead to longer working lives," the report says.
"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."
Lack of pensions awareness
The report also uncovers a lack of awareness about pensions which it says is preventing people from extending their working lives.
It says 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.
The report calls on the Government to make the positive case for working for longer more strongly.
"Many older people recognise the benefits of staying in work for longer but nevertheless perceive the Government's current strategy as a threat to their hard-earned entitlements," it says.
Changes to state pension age
Last month, the Government announced changes 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.
Around 245,000 women and 240,000 men would benefit, including 33,000 women who would have experienced a two-year rise in their state pension age, the Government said.
However, unions say the move gives "precious little comfort" to women while experts warn women's pensions plans would be thrown into disarray.
Calls for higher state pension
Pensioners have been lobbying Parliament for increased rights in retirement, including a higher state pension.
The National Pensioners' Convention (NPC) says Britain's state pension is among the least adequate in Europe.
A Department for Work and Pensions spokeswoman says the Government has 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 adds.