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Younger workers not adjusting to rising state pension age, study finds

New research from the University of Bath finds older Brits are delaying retirement due to rising State Pension age but many younger workers, especially women, risk being underprepared by holding onto unrealistic early retirement hopes.

The study, in the Journal of Pension Economics and Finance, is based on individual data from the United Kingdom Household Longitudinal Study—a large, nationally representative household survey—examining the effects of the 2011 and 2014 Pension Acts. These reforms sped up the move to equalize the State Pension age for men and women, raising it to 66 or 67 depending on date of birth.

Key findings show:

• A one-year rise in the State Pension age reduces the likelihood of retirement by 8.2 percentage points for men and 6.4 percentage points for women.
• Homeowners who report having an occupational pension are significantly more likely to retire once they reach State Pension age compared to renters without an occupational pension.
• Baby boomers—those closer to State Pension age—are delaying retirement, while Gen X—those born in the 1960s and early 1970s—are not adjusting their expected retirement age in line with policy.
• This is most pronounced among women with an occupational pension, who revise their expected age of retirement downward in response to higher State Pension eligibility age.
• Instead, many still intend to retire early, relying on workplace pensions or part-time work in retirement to bridge any income shortfall—assumptions that University of Bath researchers warn may prove overly optimistic.

The study found a clear gap between expected and actual retirement behavior. Younger workers expect to retire prior to State Pension age—whereas older workers revise their plans later, often when they are already close to retirement. By then, opportunities to boost savings and continue working are more limited.

The research highlights that those without active workplace pensions or outright home ownership are much more responsive to State Pension age reform and adjust their expected retirement age upwards.

Lead researcher Dr. Ricky Kanabar from the Department of Social and Policy Sciences at the University of Bath said, "Ensuring individuals adequately prepare for retirement is of paramount importance due to increasing longevity and individuals being increasingly responsible to fund later life. Individuals' expectations regarding the age at which they retire and their actual behavior is therefore critical to determining retirement savings and income adequacy."

Dr. Kanabar added, "We are seeing a pattern where some people are working longer due to rising State Pension age, but younger cohorts, especially women with an occupational pension, are adjusting their expected age of retirement downward in response to policy changes. The danger is that such individuals are assuming they'll retire early and then abruptly have to change their retirement plans later in life."

The research team says more must be done to raise awareness of later State Pension ages—particularly among certain groups of younger (female) workers—to help people understand how much they will really need in retirement, and encourage better use of planning tools like the government's Midlife MOT and upcoming Pensions Dashboard.

Dr. Kanabar concluded, "Overoptimism regarding retirement income and reliance on access to workplace pensions from their mid-50s could lead to prime-aged workers having to make unplanned changes to later-life employment to adequately fund retirement. Policymakers need to better engage these groups now to improve financial resilience in later life."