New research from the University of Bath has shown the impact being felt because of the ongoing rise in the State Pension Age – with older workers delaying retirement while younger workers are “holding onto unrealistic early retirement hopes”.

Researchers say that some workers could find themselves inadequately prepared for retirement because they are failing to adjust to rising State Pension ages. These are scheduled to increase to 67 between 2026 and 2028, and then to 68 between 2044 and 2046 (depending on date of birth).

The review into pensions adequacy announced by the Government in July has also created speculation that these dates may be accelerated.

The study has been published in the Journal of Pension Economics and Finance and is based on individual data from the United Kingdom Household Longitudinal Study.

The key findings show:

• A one-year rise in the State Pension age reduces the likelihood of retirement by 8.2 percentage points for men and 6.4 percentage points for women.
• Homeowners who report having an occupational pension are significantly more likely to retire once they reach State Pension age compared to renters without an occupational pension.
• Those closer to State Pension age are delaying retirement, while those born in the 1960s and early 1970s are not adjusting their expected retirement age in line with policy.
• This is most pronounced among women with an occupational pension, who revise their expected age of retirement downward in response to higher State Pension eligibility age.
• Instead, many still intend to retire early, relying on workplace pensions or part-time work in retirement to bridge any income shortfall – assumptions that University of Bath researchers warn may prove overly optimistic.
• The study found a clear gap between expected and actual retirement behaviour. Younger workers expect to retire prior to State Pension age – whereas older workers revise their plans later, often when they are already close to retirement. By then, opportunities to boost savings and continue working are more limited.

The research highlights that those without active workplace pensions or outright home ownership are much more responsive to State Pension age reform and adjust their expected retirement age upwards.

Lead researcher Dr Ricky Kanabar at the University of Bath said: “Ensuring individuals adequately prepare for retirement is of paramount importance due to increasing longevity, and individuals being increasingly responsible to fund later life.

“Individuals’ expectations regarding the age at which they retire and their actual behaviour is therefore critical to determining retirement savings and income adequacy.”

He added: “We are seeing a pattern where some people are working longer due to rising State Pension age, but younger cohorts, especially women with an occupational pension, are adjusting their expected age of retirement downward in response to policy changes.

“The danger is that such individuals are assuming they’ll retire early and then abruptly have to change their retirement plans later in life.”

The research team also says more must be done to raise awareness of later State Pension Ages to help people understand how much they will really need in retirement, and encourage better use of planning tools like the government’s Midlife MOT and upcoming Pensions Dashboard.

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