The process of retirement in the UK has changed. It used to be a relatively simple process. As soon as you reached state pension age, your employer would thank you for your service, tell you that you were free to go and you would stop working and settle down to life with a state pension. If you were one of the lucky ones, you received a pension from your employer based on your final salary. There was very little choice involved, retirement was a process that happened to you.
Fast forward to today, and even more so in the future, and the retirement process is becoming ever more complex. Individuals are faced with increasing choices. There is still a state pension age, but no longer a default retirement age at which [an employer] can ask the [employee] to leave. Private pensions are increasingly flexible and uncertain. [Individuals] can start to take some, or indeed all, of the pension from age 55, considerably earlier than the state pension.
While this gives individuals some choice and flexibility, it also presents challenges. Individuals need to be well equipped to make decisions. More people are likely to be looking to work part time before stopping completely, with income supplemented by private pensions. Others may spend all of their private pension and look to return to work; ‘un-retirement’ is increasing.
Employers have a vested interest in ensuring that the people who work for them can make good, well-informed decisions about retirement, which is much more likely if they start thinking about it early and have access to good guidance and advice. This is much more powerful if it is personalised, and offered at teachable moments; in the workplace this could be at the time of a promotion, or returning to work from maternity leave. The Cridland review of state pension age, published in March 2017, suggested the use of mid-career MOTs to enable employees to make informed plans for retirement. Forward-looking employers might see these as a way to help employees manage the approach to retirement, and the event itself, in a positive way.
Chris Curry is director at the Pensions Policy Institute