How many people will choose to work longer?

By Ian Pollock
Personal finance reporter, BBC News

VOTE RESULTS

Will you take advantage of the new laws to work past 60?

Yes

 55.54% 

Not sure

 13.66% 

No

 30.80% 

1669 Votes Cast

Results are indicative and may not reflect public opinion

The new laws against age discrimination that come into effect on 1 October should lead to some workers choosing to work on for a few more years into their early 60s.

That is because the laws abolish, to all intents and purposes, the ability of employers to enforce retirement at 60.

From now on 65 will be the earliest an employer can put their staff out to grass, unless they can come up with a good reason that has nothing to do with that person's age.

But how many people will be tempted to stay on at work for a few year longer?

Quick guide: Age Discrimination

Change plans?

A little scrutiny of the statistics is needed to have a guess at the answer.

In February 2006, 4.4 million men and 7.2 million women were claiming the state pension - a number set to rise as the population continues to live longer.

Most are over 65 - the new law coming too late for them.

It is those in their late 50s and early 60s who will be in a position to change their plans once they understand what the new laws mean.

Figures from the government Labour Force Survey, shows in the three months to June 2006, there were 1,195,000 people aged between 59 and 64 in the UK who had retired.

Retirement can be distressing, however many millions you have

Of these 340,000 were men and 856,000 were women - a significant number of people who, potentially, might have delayed retirement under the new legislation.

But if we drill down into the data we find out more.

It is illuminating to look at what age people actually retire, or have the decision forced on them.

Retirement ages

According to the ONS, in the year to June 2006, 250,000 people retired between the ages of 50 and 70, with slightly more men then women doing so.

For men, the trend was for retirement to become more common approaching 60, before the trend dipped and then peaked at 65 - far and away the most popular age at which to stop work. In that year, 43,000 men did just that.

But the number of men in the 59 to 64 age group who also retired in the last year was also 43,000.

So, on the face of it half of all men who retired between 59 and 65, worked until 65 anyway.

That leaves just over 40,000 people who choose to quit work earlier - a rather small group to target with a specific social policy each year.

What about women?

The pattern of female retirement decisions is quite different, becoming more common among women in their mid 50s, peaking at 60, and then falling to a plateau before fading away after 65.

Are there incentives for women to work beyond 60?

So while 75,000 women retired between the ages of 59 and 64 - many more than men - only 11,000 did so at 65.

Far and away the most popular female retirement age was 60, when 32,000 women left paid employment.

All this data suggests that more women than men may, potentially, be interested in deferring retirement by a few years.

But there are also clues as to why this may not happen.

Attitudes to retirement

While men receive a state pension at 65, women receive theirs at 60, offering a clear financial and psychological incentive to stop working earlier.

And 60 is also a common retirement age for occupational pension schemes, especially in the public sector.

This was highlighted by the Office for National Statistics when it published a compendium called Pension Statistics last year.

It found that a private pension - especially if there was an early retirement deal on offer - was the main incentive in helping people decide when to retire. Health problems were another influential factor.

So until state and private pension scheme ages rise, or employers stop retiring people in lieu of redundancy, many of those in their late 50s and early 60s will have reasons not to work on.

Changing landscape

The average age of retirement is, however, already rising.

Lord Turner recommended raising the state pension age to 68

The first report of Lord Turner's Pensions Commission found that after a long term decline since 1950, the average retirement age has been rising slowly since 1995.

By 2004 it had reached 63.8 for men and 61.6 for women.

This trend will probably continue in the coming years.

From 2010, the state pension age for women will start to rise from 60, eventually reaching 65 by 2020.

Following the recommendations of the Pensions Commission, the government is currently consulting on plans to raise the state retirement age even further for both sexes.

Meanwhile occupational pension schemes will soon be barred from paying a pension before 55.

And in both the state and private sector, some employers have been changing the terms of their pension provision for new joiners so that they will expect to retire at 65 rather than 60.

But overall, the actual number of people who make a conscious decision to work a little longer will probably be just a few tens of thousands each year.