Almost a third (31%) of UK homeowners over 40 plan to work beyond state pension age amid concern they will not have the funds to retire when they want, according to research from Canada Life.
The research found that 39% of homeowners aged between 40 and 50 and currently working are worried about their job prospects leading up to and into retirement.
Close to a third (31%) of over-40s believe they cannot afford to retire when they want to, while a further 30% are unsure whether they can.
Over a quarter (27%) of those surveyed plan to access their pension savings as soon as they become available, while nearly the same amount (25%) plan to access their private and state pension savings once they hit state pension age.
Only one in 10 (10%) plan to delay accessing all their pension savings while they continue to work into their retirement.
Andrew Tully, technical director at Canada Life, said: “We have seen a seismic shift away from traditional retirements, driven by economic and social trends and it simply isn’t the cliff edge event anymore.
“The desire to continue working beyond state pension age is coupled with the fact that many people are nervous about their employment prospects in later life. However, for many, this is coupled with a desire to access their pension early.
“While this may help achieve some financial security in the short-term it means there are substantial doubts about the sustainability of the pension being able to support them through later life.”
Tully warned that the Money Purchase Annual Allowance could “unwittingly catch out pension dippers” who want to continue working.
Canada Life has called for greater awareness around restrictions on the amount people can continue to contribute to their defined contribution pension pot after its research found 43% of over-55s who are working are completely unaware of MPAA restrictions.
Tully added: “The MPAA is an arbitrary allowance which is easy to increase or remove altogether, and would allow savers to rebuild their pensions, especially in light of the pandemic and resulting uncertainty created.”
The MPAA will apply once an individual first flexibly accesses a defined contribution arrangement. This restricts the level of contributions that can be made to a defined contribution scheme to £4,000 each tax year. The following are the most common ways to trigger the MPAA:
• Taking an income payment from a flexi-access drawdown fund
• Taking an income from capped drawdown (in excess of the cap)
• Those who were in a flexible drawdown plan before 6 April 2015
• Taking an Uncrystallised Funds Pension Lump Sum (UFPLS)
Individuals may be able to take benefits without triggering the MPAA, for example, access only tax-free cash from drawdown, or take out a guaranteed lifetime annuity.
[Main image: jd-mason-unsplash]