Chancellor’s pension giveaway falls flat: Just 9% of over-50 retirees say they would return to work
Back to work? No Thanks: Less than a Tenth of Retired Over-50s Would Be Tempted to Return by Hunt’s Budget Retirement Giveaway
Less than a tenth of retirees over 50 say the chancellor’s pension giveaway in last week’s spring budget would encourage them to return to work.
Despite the measures, including an increase in the annual pension allowance and the abolition of the lifetime limit, along with an increase in the amount that those who have already withdrawn money can put back in each year, Jeremy Hunt’s so-called ‘back to work budget’ has uninspired retirees, according to Interactive Investor.
Only 9 percent said increases in the annual pension allowance and the annual money purchase allowance would encourage them to retire early.
Meanwhile, more than half of the survey respondents (54 percent) said that abolishing the lifelong benefit would not encourage them to work because they would like to retire.
Another 20 percent of retirees over 50 said it wouldn’t make a difference because they don’t have enough pension pot.
Fewer than one in 10 retirees over -50 say Hunt’s measures will get them back to work
The measures were widely seen as a government response to problems with high earners, such as doctors, who say pension caps make it unattractive for them to stay in work and could trigger sudden tax bills.
The chancellor also increased the amount that employees who have already taken their pension can put into their pension pot each year without tax penalties, from £4,000 to £10,000.
This is known as the annual cash purchase allowance and is designed to stop the recycling of pensions. Raising it is seen as a way to get more regular earners back to work.
Alice Guy, head of pensions and savings at Interactive Investor, says: ‘The Chancellor may be blowing his whistle on his plans to get the over-50s back to work.
For many recent retirees, it’s a big ‘no thanks’ to the chancellor’s offer to save more for retirement. For most, saving enough to break through the lifetime or annual retirement payment is a distant dream, and for others there is little that can get them back to work.
It’s a tough challenge for Jeremy Hunt because with 3.5 million over-50s out of work, 320,000 more than before the pandemic, he hopes retirement turns into encouraging over-50s to kick off their boots. substances and return to battle.
“But our survey shows that most retirees either don’t want to go back to work or won’t be helped by the recent pension changes.”
At the same time, however, more than half of retirement savers (56 percent) feel they will never be able to retire, with two in three expecting to continue working past retirement age, according to new research from The Living Wage Foundation and Aviva.
More worryingly, two in five respondents said they’re not confident they’ll save enough to meet even their basic needs when they retire.
And amid the cost-of-living crisis, one in nine retirement savers has stopped or reduced their contributions in the past six months.
In response, the Living Wage Foundation has launched a new Living Pension standard, which Aviva has signed up to, a voluntary savings target for employers to help employees build a retirement pot that will cover the essentials in retirement.
The livable pension is intended to encourage employers to help employees save more for retirement
The savings target for Living Pension is 12 percent of an employee’s annual salary, of which the employer pays at least 7 percent. This builds on automatic enrollment, where the employer only needs to contribute 3 percent.
The Living Pension savings target can also be implemented as a cash payment of £2,550 per annum.
Katherine Chapman, director of the Living Wage Foundation, said: ‘Low retirement savings have been a long-standing problem and our research shows that workers are concerned about an uncertain future.
“The current crisis in the cost of living exacerbates the problem. Many workers are struggling to make ends meet as the cost of living rises and are unable to prioritize retirement savings, risking a future crisis of millions of people who cannot even meet the basic needs of their retirement can afford.’
Research from the Resolution Foundation last year found that four in five workers — and 95 percent of low-wage workers — who paid into defined contribution plans were not saving enough to reach a retirement pot that would meet basic needs in retirement.
Danny Harmer, chief people officer at Aviva, added: “By introducing the Living Pension and paying the real Living Wage, organizations can help their people balance saving for tomorrow and living for today.
From pension to economy, what the Budget means to you
The headline act in the budget was a major shake-up of pension savings rules, lifting restrictions that limit the amount that can be deposited without tax penalties.
A stop for the rich or a step that will help many more young professional savers strive for a decent retirement?
The budget also contained news about the economy, a glimmer of hope about the energy bill and a significant expansion of 30 hours of free childcare.
The podcast team dives into the budget and joins them in explaining the retirement element is a special guest, This is Money’s retirement columnist and ex-pension secretary Steve Webb.
Press play to listen on the player above, or listen to Apple podcasts, Audio tree, YouTube And Spotify or visit our This is the Money Podcast page.