Only 9% of retired over-50s say pension changes might coax them back to work

interactive investor poll sheds light on the impact of last week’s Budget pension changes.

A poll carried out on the interactive investor website on 16 to 17 March shows that only 9% of over-50s who are already retired might be tempted back to work following last week’s Budget pension changes.

This follows reports over the weekend showing that only 100 hospital doctors left the NHS in 2022 due to voluntary early retirement, according to information provided by junior health minister Will Quince. 

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The survey results and respondents’ comments show that Jeremy Hunt will have a tough road ahead to persuade retired over-50s back to work. A total of 54% of retirees said the abolition of the lifetime allowance would not encourage them to work as they enjoy being retired, while another 20% of retired over-50s said it would make no difference because they don’t have a large enough pension pot.

Notes: 1,513 polled on interactive investor website between 16 Mar/17 Mar, includes 777 who are both retired and over 50-years-old.

Survey comments

Our survey also allowed respondents scope to comment on the lifetime allowance and other pension changes. The respondents’ comments reveal a wide range of opinions and a variety of personal circumstances that impact on the choices of retired over-50s.

A minority of respondents commented that the pension changes might encourage them back to work. One respondent said: “I’m already retired but tempted to return to work, this adds to the temptation.”

But others felt the abolition of the lifetime allowance might even make them less likely to return to work. One of those surveyed commented that, “the abolition of the LTA now leaves me with less pressure to work. With a pot worth £1.2 million, I will be better spending time investing the pot to maximise growth. I’m also limited to paying £10K per year into my pension due to the money purchase annual allowance rules if I came out of retirement to work.”

Others who worked in the NHS said that working conditions meant they would retire early regardless of tax changes. One of those surveyed commented: “I still intend to retire early regardless. It is the working conditions in the NHS that are the issue, not the tax situation!”

Some respondents said the tax changes would make no personal difference as their pension pot was far too small. One respondent commented that: “the changes don’t encourage me to go back at all. For the extra pension contribution to be meaningful, I would either have to work in a very high-paid job or work for a long time - neither of which appeal to someone fast approaching 60!”

Others are reluctant to take advantage of the pension changes because they fear there will be more changes in the future. One respondent said: “I think the cap will be re-imposed and pension lump sums will be held hostage or more highly taxed by politicians.”

In contrast, some of those surveyed disagreed with the pension changes and felt they went too far in helping the rich. One respondent said: “I have hit the LTA already, but I don't think that tax bungs to the well-off should be a government priority.”

Alice Guy Head of Pensions and Savings at interactive investor says: “Our poll results show that most retirees enjoy being retired and won’t be coming back to the workplace any time soon. 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.

“Only 9.3% of retired over-50s surveyed on the interactive investor website after last week’s Budget said the lifetime allowance changes would be enough to lure them back to work. 54.3% of retirees said they liked being retired and have no plans to return to the workplace, while 19.3% said the changes would make no difference to them as they do not have a big enough pension. Likewise, the changes to the pension annual allowance and money purchase allowance will make scant difference to most people’s retirement plans, with only 9.4% of retirees over-50 saying the changes could tempt them back to work. 

“It’s a difficult challenge for Jeremy Hunt as with 3.5 million over-50s not working, 320,000 more than before the pandemic, he is hoping the pension changes encourage over-50s to dust off their boots and return to the fray. But our survey results show that most retirees either don’t want to return to work, or will not be helped by the recent pension changes.”