As the number of UK residents reaching the retirement age of 65 grows year by year, the amount not wishing to retire at this time also increases. This means that UK companies are likely to be forced into adapting their current policies to cater for an older workforce.
Research compiled suggests that in 2013, just over 600,000 workers reached retirement age and of these, 10 percent did not wish to retire or had no intention of retiring.
Surprisingly only 18 percent hoped to retire early, while just one in six still currently working past the age of 65 wanted to stop.
Pension Impact
As well as placing new demands on British companies nationwide, the UK pension market is going to need to move swiftly to accommodate this new trend, as those who have saved and do not wish to stop working, but wish to receive their pension without being hit by large tax bills, must be catered for.
The research also revealed that the majority of those surveyed felt that the reason for their desire to continue working was due to a financial shortfall once they hoped to retire, not the sheer enjoyment of working.
Leaving on a Jet Plane
Perhaps the most revealing aspect of the research – carried out by pension firm JK King & Partners – was the vast majority of workers who hoped or wished to be able to retire away from the UK. A staggering 78 percent of those polled said they had no desire to remain in the country upon retirement.
The reasons ranged from the huge pension deficit faced by the government currently – a deficit which could affect pensioners at any given moment – to the better flexibility and investment options offered by transferring accrued savings into a Qualifying Non-UK Pension Scheme (QNUPS) or a Qualifying Recognised Overseas Pension Scheme (QROPS).
QROPS
A QROPS offers savers living abroad the option of transferring their UK-based pension into a scheme held overseas. Members benefit from a whole host of incentives which include freedom of choice for investment, up to a 30% lump sum tax-free withdrawal, full inheritance benefits for family members, and the ability to draw the scheme in the relevant currency, meaning that fluctuations in the British pound are rendered ineffectual in relation to the fund size.
Since the introduction of QROPS, the transfer of UK-earned pensions has rocketed in popularity due to the unstable nature of the UK market. Over 300,000 Brits permanently leave the UK for warmer climes every year, a figure which looks set to increase over the coming decade. The UK pension deficit – which currently stands at around £111 billion – is not likely to be helped by the volume of pensions being transferred overseas, something which has caused the government to seriously consider the future of the scheme. They are currently thought to be reviewing qualifying criteria, as well as effectively banning those with a public sector pension from being able to transfer their savings as of April 2015.