End to default retirement age will see rise of DIY retirement

Article date: 8 December 2010

  • 33% of retirees say they felt obliged to retire
  • Removing compulsory retirement age in 2011 will remove this pressure
  • A fifth still likely to be pushed into retirement due to ill health.  

A third of retirees (33%) say they were pushed into retirement because their employer suggested it or because they "reached the normal age" at their workplace, according to Aviva’s latest Real Retirement Report. The report reveals that there is going to be a significant shift in how people approach retirement, as the Government removes the default retirement age in April 2011. This means that almost 700,000 people who reach retirement age each year will have the freedom to stop working at a time which suits their individual lifestyles and finances.

However, while the “Do It Yourself” approach to entering retirement is likely to rise, some people may still be forced to finish their careers prematurely. One in five (20%) retire due to chronic or age-related health conditions; and 11% retire as they were made redundant and felt it was "too late to get another job".

Rise in career down-shifting:
There is already strong evidence that those approaching retirement do not see the move from employment to retirement as a clean break. In the latest report, Aviva has identified a trend towards down-shifting or people looking to reduce their work commitments prior to finishing work. Currently, 58% of over-55s have chosen to down-shift - starting to do so at an average age of 57 – but this is expected to increase. 

Down-shifting takes a variety of forms with 21% working fewer days and 15% working fewer hours, while remaining in the same career. Others have switched to a different form of employment with 16% deciding to move to a less stressful role; 11% undertaking consultancy work; and 11% turning a hobby/interest into an income-generating career. 

The top three jobs that over-55s consider ideal as "part-tirement" roles are office administration (13%), full-time or supply teaching (7%) and working in a shop (7%). 

Six in 10 (60%) over-55s do not want to keep working for their current employer past the current retirement age (60 for women and 65 for men). This highlights the fact that while people do want to remain economically active, they are looking for a more flexible approach to work or new challenges. 

Clive Bolton, ‘at retirement’ director from Aviva comments: “The removal of the default retirement age provides people with the freedom to design their own retirement. Some people will naturally choose to stop work when they start claiming their state pension, but many are likely to continue working as they genuinely enjoy their roles and gain both social and financial benefits.   

“As part of this move to DIY retirement, we expect to see more people down-shift their careers as they look for more flexibility and less pressure in the final few years of their working life. However, that said, a fifth of people retire due to health issues so while people can choose to work into later life, any additional boost to their finances should not be relied upon.”

Aviva offers the following checklist for those planning their retirement:

  1. Draw up a complete picture of your assets. This should include all pensions, savings and investments as well as other assets such as your house. It is far easier to make decisions if you have a complete financial overview.
  2. Track down your pension pots. If you’ve had more than one job in your working life, you may well have paid into more than one pension scheme. By combining them when you buy an annuity, you may be able to get a better deal.
  3. Plan your retirement with your health in mind. If your job has certain physical or mental demands, it may become harder in later life. Therefore, the potential need to rethink your plans or stop work due to ill health needs to be considered.
  4. Consider how your career can change. If you want to work into later life, think about how you can adapt your career. Does your job allow you to work fewer days or shorter hours? If not, you may want to think about how you can switch careers, which may involve getting new qualifications or retraining.

-ends-

Download a full copy of Aviva’s Real Retirement Report (PDF 863KB).

If you are a journalist and would like further information, please contact:

Aviva Press Office:
Sarah Poulter: 01904 452828 / 07800 691569 / sarah.poulter@aviva.co.uk

The Wriglesworth Consultancy:
Lee Blackwell / Katie DePelet / Emma Beresford - 020 7427 1400 / l.blackwell@wriglesworth.com

Methodology:

Management information was provided by Aviva and the remaining data was sourced from the Aviva Real Retirement Index which used findings from over 2,400 over-55s. In addition, the Department of Work and Pensions estimates that in 2010, 682,319 people will reach the state retirement age – a figure which is due to increase next year as the population ages.

This report is a definitive look at the personal finances of the UK’s over 55 population. Not only does it look at personal wealth, income sources and expenditure patterns but also tracks how these change in the "three ages" of retirement.  

In addition to the regular data, each quarter a spotlight will be shone onto a different relevant topic with career down-shifting being the choice for December 2010.  A press release highlighting the other key points from Aviva’s Real Retirement Report can be found at:  www.headlinemoney.co.uk

Notes to editors:

Aviva is one of the world's largest insurance groups* with 53 million customers worldwide and 46,000 employees.

Aviva’s main activities are long-term savings, fund management and general insurance, with worldwide total sales of £45.1 billion and funds under management of £379 billion*.

In the UK, Aviva takes care of its 19.2 million customers by helping them look after their future, protecting what’s important – from their health to their homes, their cars to their business – and saving for the future.

Aviva has a 10.5%** share of the UK life and pensions market and insures one in six homes and one in 10 cars in the UK. It is also one of the oldest UK insurers, with a heritage stretching back more than 300 years.

RAC, which is owned by Aviva, provides breakdown and insurance services for individuals and businesses and has around seven million customers.

Aviva is carbon neutral worldwide, and is ranked in the top 10% of socially responsible companies globally by the Dow Jones Sustainability World Index. In the UK, Aviva invested £3.8 million into local communities in 2009. Read our corporate responsibility report at www.aviva.com/cr.

Aviva’s global Street to School programme is working in partnership with Railway Children in the UK to get children living on the streets back into education and everyday life. Find out more at www.aviva.co.uk/street-to-school.

The Aviva media centre at www.aviva.com/media includes images, company and product information and a news release archive.

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* based on gross worldwide premiums at 31 December 2009

** Source: ABI data released August 2010

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