New retirement playing field could cost savers

The Government's consultation process looking at scrapping the Default Retirement Age (DRA) for the UK workforce provides a welcome reminder for savers in the UK to start planning ahead for their financial future or face working into their seventies.

Friends Provident argues that although abolishing the default retirement age will make it easier for people in the UK to work longer, there will be a proportion of the 'greying' population who may in fact not be fit enough to work.

The provider also warns that axing the DRA could have unintended consequences for Group Risk benefits. With no fixed termination date, this could ultimately lead to an increase in cost for employers meaning some may consider removing cover altogether for their employees.

With the number of workers aged 55 plus expected to grow significantly in the next 10 years (from 5.14 million to 7.16 million according to the Visions of Britain 2020 report) Friends Provident believes this provides a good opportunity for employees to phase their retirement as they will no longer be required to leave employment at a pre determined age but cautions people should not use this as an excuse to put off saving for retirement.

Friends Provident's research - Visions of Britain 2020, The Workforce- showed 48% of workers would like to work either full or part-time beyond the statutory retirement age and the provider believes today's proposals should help enable this happen.

Martin Palmer, head of pensions marketing at Friends Provident, said: "Axing the default retirement age clearly provides greater individual choice and freedom to work as long people want to but people need to be aware of the reality of working longer. As a nation we should start seeing retirement as a process in our lives and not a one-off event.

"We need to provide the right savings options to enable employers to provide a suitable savings culture that will encourage people to take control and start investing in their future today. Corporate platforms will offer employees the chance to select tax efficient savings that match their life goals by encouraging a greater percentage of the working population to start making provision for later on in life."