Workers could increase their pension savings by a third if they work 5 years beyond the state pension age, according to research by Friends Life and the Pensions Policy Institute.
Savers would see their weekly income rise by up to 33% if they continue to work full-time, contribute to their private pension and defer their state pension for 5 years.
The research categorised people by their average pension pots:
- the top 25% had an average pot of £1,149,700
- the second and third quarters had averages of £42,000 and £15,000 respectively
- the lowest quarter averaged £2,400.
After 5 years of working past the state pension age, each group can increase in their weekly income:
- the top earners will see a rise of 25% (£273.40)
- the second and third quarters both increase by 33% (£63.20 and £55.30 respectively)
- the lowest earners will save £51.80 more each week (33%).
The research is based on people deferring their pension for 5 years as well as continuing to work. The new state pension increases 5.8% for each year delayed.
Andy Curran, UK chief executive of Friends Life, said:
“It’s really positive to see that people can make such a difference to their pension saving by working a relatively short amount of time beyond the state pension age.
“Our new study uncovers how continuing to work for just a few more years can help consumers take back more control. To really make the most of retirement income, both government and the pension industry have a responsibility to help people review their options and the implications of continuing in work.”