The vast majority of retirees have no intention to return to work, despite the Chancellor’s new pension reforms, a survey has found.
Chancellor Jeremy Hunt announced a number of changes intended to get more people back to work during last week’s Budget. Among them were reforms to pensions, including removal of the lifetime allowance (LTA) ceiling on how much they can put in their pension pots without being hit by punitive tax rates.
The change - designed to prevent well-paid workers such as doctors from retiring when they hit the cap - will cost the Treasury £2.75 billion over five years in lost tax revenues.
However, a new survey conducted by Interactive Investor suggests that the changes might only have a limited impact on labour force participation.
According to the survey, only 9.3% of the 777 retirees aged over 50 surveyed said the change might encourage them back to work, while 84.7% said it would not.
The majority of those surveyed said that they had “no intention” of returning to work because they enjoy retirement, while 17% said the cap would not have affected them anyway.
One respondent to the survey noted that the changes may actually make them less likely to return to work.
“The abolition of the LTA now leaves me with less pressure to work,” they said. “With a pot worth £1.2 million I will be better spending time investing the pot to maximise growth.
Another respondent also commented on the likelihood of the next Government reintroducing the cap.
“Our poll results show that most retirees enjoy being retired and won’t be coming back to the workplace any time soon,” Interactive Investor head of pensions and savings Alice Guy said. “The Chancellor may be whistling in the wind with his plans to encourage retired over 50s back to work.
“For many recent retirees, it’s a big ‘no thanks’ to the Chancellor’s offer for more pension savings. For most, saving enough to breach the lifetime allowance or the annual pension allowance is a distant pipe dream and for others there’s little that can induce them back to work.”
