UK pensions crisis: Low interest rates are forcing people to head back to the drawing board on their retirement plans

Hayley Kirton
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With interest rates holding fast at 0.5 per cent, many are having to replan their retirement (Source: Getty)

Low interest rates have not only taken their toll on general savings, they have also hampered many people's retirement plans, research out today has found.

According to the survey by Canada Life Group Insurance, almost a quarter (23 per cent) of employees have been forced to rethink their retirement plans because of low interest rates, including eight per cent who were determined to down tools at 65 but are now resigned to working past that age.

Overall, more than two-thirds (67 per cent) of UK employees still expect to be plugging away at their day job beyond the age of 65. This figure rises to 85 per cent for those aged between 21 and 30.

Financial pressures topped the list of reasons for people feeling they needed to carry on working past 65, with 44 per cent saying that their pension would not be sufficient if they retired at that age.

Other reasons cited included people enjoying their job so much that they wanted to stay there as long as possible (38 per cent) and wishing to carry on receiving generous employment benefits (12 per cent).

Why people won't be retiring at 65

Pension pot not sufficient: 44%

Enjoying their job too much: 38%

Cost of living too high: 25%

Not sure how long their money will last: 24%

Worried about long-term care costs: 19%

State pension not longer reliable: 18%

Employee benefits too valuable: 12%

Children to support: 6%

"Seven years of rock bottom interest rates have had a lasting impact on a generation already plagued by insufficient pension contributions, with many forced to work past the age of 65," said Paul Avis, marketing director of Canada Life Group. "Recent reforms have spurred a long overdue national conversation about pension savings and a wave of employees have been confronted with the hard truth they are going to have to work beyond the traditional retirement age."

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