State Pension Trade-In Wanted To Retire Sooner

Many workers approaching retirement would trade-in a slice of their state pension if they could take the money when they were younger and give up work earlier.

More than 40% want more control of when they can access their state pension and 25% would sacrifice some of the money if they could retire younger.

The figures come from research by global accountancy and finance firm PwC, who asked 2,000 people about their retirement options.

The general conclusion was the government should do away with a state pension age and instead introduce a ‘state pension window’ which would give those approaching retirement more flexibility to make decisions to suit their personal financial and lifestyle circumstances.

The window would let people match their health and savings with the state pension amount adjusted based on their chosen retirement date.

Early retirement options

The study revealed 47% of those approaching retirement are ready to give up £4,500 a year for life from their state pension in return for leaving work a year earlier.

That’s based on the flat rate state pension of £144 a week or £7,488 a year due to start from April 2016.

PwC says the thinking behind the decision is many people could reduce their hours or give up work if they received some of their state pension earlier.

The reasons for cutting hours or retiring early included:

  • Just under half want to spend the time on hobbies or holidays
  • A third want to spend extra time with their families
  • A fifth feel their job is physically too demanding for them to carry on until state pension age

Although the government has announced radical changes to the way pensions are paid in the recent Budget 2014, by 2020, the state pension age will rise to 66 years old, to 67 by 2028 and 68 after 2030.

Broken system

The research showed that the value of the state pension is an important financial factor when deciding when to retire for more than 90% of people.

However, a fifth of people also said they would consider working beyond state retirement age if they could draw an enhanced pension in their later years.

Raj Mody, head of pensions at PwC, said: “Crossing the state pension line at the same time for everyone does no work anymore. People obviously want a more flexible retirement age that gives them options that suit their personal situations.

“The current system zeroes in on life expectancy, but this is not the same UK wide and we should consider how this affects people in regions with lower or higher longevity as well as those who are less or more affluent.”

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