‘Graduated’ pension to help people work longer

THE government should consider introducing a “graduated” state pension to allow people to draw some money before they retire, which could help encourage them to continue working, a think-tank has recommended.

The International Longevity Centre said that while many people understand the benefits of remaining in work for longer, they perceive the government’s current strategy as a “threat”.

Its Gradual Retirement and Pensions Policy report said that 55 per cent of people surveyed supported the idea of a “graduated” state pension, whereby people approaching retirement could begin receiving part of their pension to cut the number of hours they work. In return, they would see lower payments when they fully retired.

The report said: “There is strong support for graduated state pensions, and therefore the government should explore the possibility that it will lead to longer working lives.

“It may be possible to limit the graduated state pension to individuals in certain circumstances, that is, those in danger of leaving the labour market entirely.”

The report said a lack of awareness about pensions was preventing people from extending their working lives.

It said 40 per cent of people would consider delaying their retirement if they could defer the state pension in return for higher payments later – yet 59 per cent were unaware that this option is already available.

The report called on the government to make the case for working for longer more strongly. It said: “Many older people recognise the benefits of staying in work for longer but nevertheless perceive the government’s current strategy as a threat to their hard-earned entitlements.”