My compensation and benefits career has been spent working in professional services organisations in the financial and technology sectors. In these organisations, proposed increases to the state pension age will not have an impact on the retirement plans of many employees.
Our employees are fortunate enough to be relatively high earners and most take part in the organisation’s pension scheme. This means that, as they approach their 60s, most should have personal savings, investments and assets, and should have built up a fairly substantial pension fund rather than be reliant on a state pension.
I say ‘should’ because this is all rather hypothetical. Technology is a young sector, which employed enthusiastic young adults in the 1980s and 1990s. Even these early tech-sector employees are typically only in their 40s or 50s now. In 10 years of working in the technology sector, I don’t think I’ve seen a UK employee retire.
The assets that our employees will have later in life means they should have a fair amount of flexibility around their retirement plans, and I would expect many to go and demonstrate their competence in a different way later in their careers; for example, as independent consultants or contractors. They may work part time or on short-term projects, rather than work full time every day up to a retirement date.
Once they get to a point where they feel they have accumulated sufficient retirement income, the main driver of their decision to eventually stop working and ‘retire’ is likely to be based on opportunities, what they feel like doing with their time, health, or other priorities. It won’t be the date at which their retirement income is ‘topped up’ with the state pension, so small changes to the state pension age will not alter some organisations’ pension strategies.
Ian Wright is director of compensation and benefits at The Attachmate Group