Final-salary Brits retiring earlier

MANY PEOPLE are retiring earlier despite the pensions crisis, research has revealed. For those in final-salary schemes, the average age of quitting work fell to 59 last year from 61 in 1985.

Researchers analysed the retirement ages of 100,000 members of final-salary schemes and found that 60% of men retiring in 2003 were under 60, compared with 45% in 1985.

Similarly, 60% of women retiring last year were under 60, compared with 55% in 1985.

However, the experts point out that those in final-salary schemes have been protected from the current crisis because their pension funds are guaranteed by their employer.

Paul McGlone, of Aon Consulting, which produced the figures yesterday, said: 'Whilst there has been speculation that a harsher economic climate has led scheme members to delay drawing on their pension until later in life, our analysis shows that the economic climate has not had a major impact on retirement age.

'Members are still drawing their pensions earlier than they were during the 1990s.'

But many people with other types of pension scheme - such as defined contribution plans, which base payouts on stock market performance - are more likely to retire later, said McGlone.

Another study warned yesterday that British workers have saved on average £50,000 short of what they need for a comfortable retirement.

Analysts Datamonitor said that failure to put aside this extra cash will mean shortfalls in their retirement income averaging £4,000 a year. This would leave their income at an average of £13,000 a year.

Meanwhile, the percentage of companies with final-salary schemes open to new members has fallen from 56% in 2002 to 38% this year, says a survey by Mercer Human Resource Consulting.

A further 12% of firms plan to close their final-salary scheme to new staff in the coming year.