PwC report – State Pension Age reform required to make Government pensions proposals a reality

Published at 00:01 AM on 28 April 2014

  • The age people expect they will receive their state pension affects their retirement plans
  • 80% of survey respondents hope to retire before 67, the planned state pension age by 2028
  • One in five people say their job is too demanding to carry on working to the qualifying state pension age
  • More than four in ten people would make use of greater flexibility around when they can take their state pension
  • Half of people would be willing to sacrifice more than 5% of their annual state pension amount in exchange for accessing it earlier
  • PwC proposes a state pension window approach, instead of gradually increasing state pension  age for everybody

New PwC research reveals that people want more choice over when they receive their state pension, even if it means cutting the amount of weekly state pension they receive.

PwC’s research with over 2,000 UK adults reveals that the rigid state pension system, where the age people receive their state pension is set by the Government, doesn’t provide the flexibility people want and need.

PwC’s new report ‘One Size Fits None: Does the flexible workforce of the future need a flexible state pension’ finds that more than four in ten of those surveyed want choice over when they can access their state pension. One in four say they would opt to retire earlier than a fixed state pension age even if this means receiving a reduced amount for the full life of their pension.

Providing more flexibility in the state pension system would match the reforms to workplace pensions, following the Government’s announcement in the Budget that it will no longer require people to buy an annuity at retirement.

PwC suggests that one way to tackle people’s appetite for more flexibility on when they can access their state pension is to dispense with the concept of a single state pension age and instead introduce a state pension window.  This would be the final essential piece of the Government’s ‘freedom and choice in pensions’ proposals by also allowing people to choose when they receive their state pension between a range of ages, and receive an adjusted amount for the life of their pension based on their chosen start date.

The research by PwC’s pensions advisory group shows that nearly half (47%) of the people who want to receive their state pension earlier would be prepared to take a cut of more than £4501 a year for the life of their state pension, for being able to take it one year earlier.

The main reason people would choose to receive a lower state pension amount earlier is to allow them to reduce their hours or give up work. Just under half want to reduce their hours to pursue other interests and over a third (37%) want to spend more time with their family. More than one in five say their job is too demanding to carry on working to the qualifying state pension age.

Despite the Government’s outlined rises to state pension age2, meaning anyone currently in their early 50s or below won’t receive their state pension until they’re aged 67, PwC’s research reveals that 80% of UK adults still hope to retire before age 67. The state pension is an important factor in people’s retirement decisions and constitutes a significant proportion of the total retirement income on which most pensioners depend. According to PwC’s research, only 9% of people say the age at which they receive their state pension is not an important factor when deciding at what age to retire.

As well as providing the flexibility people want, introducing a state pension window will introduce more fairness between socio-economic groups. This approach may increase spend for the Government during an initial transition period, but should ultimately produce significant savings and make the cost of providing a state pension more sustainable in the long term. However, the exact impact will depend on the terms of the flexibility, how people spend their retirement income and how long people are living.

Raj Mody, head of pensions at PwC, said:

“It is clear a one size fits all state pension age does not work anymore. A more flexible state pension system will place retirement decisions firmly back in the hands of workers and companies.  

“The current policy of gradually increasing a single state pension age focuses on overall life expectancy, but doesn’t take account of variations for different socio-economic groups and regions.

“Rather than prescribing when people can access their state pension, people should be allowed a degree of choice based on their individual circumstances. If the terms are set right, this approach will ultimately produce significant savings and greater sustainability of costs for the Government in the long-term - especially if life expectancy increases dramatically for some parts of the population.

“A more flexible state system completes the fundamental pensions reform George Osborne is keen to deliver and will bring pensions and retirement savings firmly into the modern age where people want flexibility, choice and control.

“We need to create a state pensions system which is fairer, more stable and sustainable in the long term. Scrapping the state pension age and replacing it with a state pension window will produce better outcomes for people, companies and the Government.”

PwC’s research shows that 19% of people want to defer their state pension to receive a higher amount for the full life of their pension. The main reason is to fund and pursue other interests and over a third said they need to carry on working past the state pension age to build up their savings.

Jon Andrews, head of HR consulting at PwC, said:

“The research shows that the state pension is often the difference between people deciding to retire or not. With the Government’s outlined rises to the state pension age, people’s hopes of retiring as early as they originally planned are unlikely to remain a reality for many.

“Introducing more flexibility into the state pension system simply reflects the working environment where many employers encourage, and employees benefit from, flexible and part-time working.  It will also reduce the ripple effect on personal or workforce management decisions on the time of retirement. The added flexibility means retirement no longer needs to be a one-time event; we could easily see the rise of the part-time pensioner.

“A state pension window gives people and companies much more control in their retirement planning and removes any nasty surprises. This flexibility also means people can take their state pension later, allowing people with key skills to stay in the workforce for longer.”


Notes to Editors:

  1. Based on single state pension value of £144 per week.
  2. State pension age is currently set at age 65 for men, moving to age 65 for women in 2018. It will increase for both men and women to age 66 by 2020, moving to age 67 by 2028 and age 68 by the mid 2040s (although it is intended to bring this latter date forward to the mid 2030s). Under current plans, the state pension age will be reviewed every five years, with the intention that it keeps pace with how much longer we’re living.The objective is to have one third of adult life post state pension age.
  3. You can access the report via:
  4. Raj Mody is available for interviews - please contact Amy Tiernan, Tel: 020 7804 0556 or [email protected]
  5. For further commentary on market issues, visit our pensions blog:
  6. Skyval is a web-based pensions platform which sponsors, trustees and their advisers can use as a single tool to analyse the impact of changing pensions regulations and market developments. It is now being deployed by over £80bn worth of pension schemes. For more information please visit


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