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Friday, 28 November 2014

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Pension flexibility advised

Pensions are an issue which continue to cause debate across Cumbria and which show no signs of disappearing.

Now the Government has been told it should consider introducing a “graduated” state pension to allow people to draw some cash before they retire – which could help encourage them to continue working for longer.

Thinktank 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, which used a survey of 1,000 adults to form part of its findings, said that 55 per cent of people supported the idea of a “graduated” state pension, whereby people approaching retirement could begin receiving part of their pension in order to reduce the number of hours they work.

In return, this was likely to mean they would receive lower payments when they fully retired.

“There is strong support for graduated state pensions, and therefore the Government should explore the possibility that it will lead to longer working lives,” the report said. “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 also uncovered a lack of awareness about pensions which it said was preventing people from extending their working lives.

It said that 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 positive case for working for longer more strongly.

Last month, the Government announced changes to the planned increase in the state pension age, saying that tens of thousands of women would benefit at a cost of more than £1 billion. It said a plan to raise the state pension age to 66 in 2020 would be delayed by six months from April 2020 to October 2020.

About 245,000 women and 240,000 men would benefit, including 33,000 women who would have experienced a two-year rise in their state pension age, the Government said.

However, unions said the move gave “precious little comfort” to women while experts warned women’s pensions plans would be thrown into disarray.

A Department for Work and Pensions spokeswoman said the Government had already increased flexibility around retirement.

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