To Back to Work or Not: Challenges of Thousands of British Pensioners

The results of a new review of the pension system in the UK, describing the challenges that this sector will face in the future, emphasised the need to review it to avoid an uncertain financial future for the next generations of British retirees. In addition to describing the challenges facing the future generations of the UK, this research emphasises that the pension system in the UK should be thoroughly reviewed. So, what is the biggest challenge facing the UK pensions market? What is the reason for British pensioners to continue working after retirement? Also, does the pension in the UK cover the cost of living or not?

Uncertain and insecure retirement of working people in the UK

 CNBC, according to the result of research titled “Challenges for the UK pension system: the case for a pensions review” published by the Institute of Financial Studies (IFS) think tank, reported that if the current trend continues, an uncertain and financially insecure retirement period It will be waiting for people working in this country. According to the research results, about 90% of English people must deposit an appropriate salary (about 15% of their income) to their retirement savings. This amount, if deposited, can improve their pension status.

The need to review the field of pension services

The IFS research report states: ” The relatively strong performance of retirement incomes over the last decade could be breeding complacency among policymakers with our pensions system. Without policy action, the financial security in retirement for future generations of pensioners may not be quite so rosy: recent trends among pensioners may not continue and indeed could reverse.” Romi Savova, the Chief Executive Officer of PensionBee, a pension service provider, says that increasing the participation rate of working people in the UK to receive pension services should be at the top of the agenda for reforming the pension system in the UK.

The mechanism of increasing contributors in retirement savings

Savova called automatic registration a valuable solution to increase the number of people contributing to retirement savings and added: “Auto-Enrolment has proved to be an invaluable tool in increasing the number of people participating in pension saving, and by abolishing the lower earnings threshold (currently £10,000), its benefits could finally capture a greater number of lower-paid and part-time workers.” Also, referring to the self-employed workers, he pointed out: “Including self-employed savers within that framework would also boost their pension pots and reduce their dependence on the state pension later in life.”

Reducing the contribution of the British to the retirement savings

Only 44% of British people with an annual income of 5,000 to 10,000 pounds in 2019 have paid into the pension fund. This is while 87% of middle-income earners (from £25,000 to £30,000 per year) and 92% of high-income earners (over £50,000 per year) have contributed to retirement savings.

The pension system in the UK

In the pension system in the UK, most people receive defined benefit pensions through contributory schemes, where the final amount of the assistance is determined based on the amount invested in these schemes during the working period. Another less popular option is for British pensioners to receive a pension based on their final salary and the number of years they have worked for their employer.

Postponing retirement due to the cost of living crisis in the UK

New research shows that every day older people in the UK are being forced to delay their retirement and continue working because of the cost of living crisis in the UK. The number of people over 70 who are still working rose 61 per cent last year from a decade ago, according to Rest Less, an online community focusing on issues of older workers.

Continuing to work after retirement to make ends meet

Published data shows that more than 446,600 people over 70 have yet to retire in this country last year, compared to 277,926 in 2012. Stuart Lewis, CEO of Rest Less, said: “But there’s also a darker side for some who, amidst the rising cost of living pressures, are struggling to make ends meet and are feeling like they need to work and continue to work to maintain their pension savings while they still can.”

Men still make up the majority of the over-70 workforce in the UK, but the increase in female workers in this age group has been more dramatic, partly due to the gradual equalisation of the retirement age for men and women between 2010 and 2020 in the UK. Until now, British women could retire five years earlier, at age 61. The retirement age for men and women in the UK is 66, but it is set to rise to 68 by 2046.

British retirees are forced to continue working.

Before the Covid-19 pandemic and the reduction of life expectancy for the first time in a decade in the UK, the number of people reaching the state pension age was more than that; this means there are more experienced people in the workplace than ever before. Many of those still working past retirement age have no choice but to do so, given the UK’s current cost of living crisis.

Factors affecting the poor living conditions of English Retirees

The cost of living crisis in the UK began in 2021 after the rate of inflation and the increase in the price of essential and primary goods in this country exceeded the income of families to reduce the actual value of the payment of these families. Along with skyrocketing inflation, the Covid-19 epidemic and the sanctions imposed by the West against Russia due to the war in Ukraine were added to the worsening economic conditions in the UK. The cost of living in the UK has risen dramatically over the past two years. The annual inflation rate reached 11.1% in October last year, the highest level in 41 years. All this has hurt the lives of British retirees.