Almost one in three over 40s plan to work beyond their state pension age

  • A third of over 40s (31%) who own homes plan to work beyond their state pension age 
  • This decision is driven by questions of affordability and insecurity
  • Although over a quarter (27%) of savers plan to access pensions early, triggering the Money Purchase Annual Allowance 

New research1 from Canada Life has found that almost a third (31%) of UK homeowners over 40 who are not yet retired plan to work beyond their state pension age. 


This expectation to work past the state pension age is coupled with anxiety, as 39% of UK homeowners aged between 40 and 50 currently working are worried about their job prospects leading up to and into retirement. This anxiety is compounded by the fact that 987,500 over 45 year olds are currently on furlough which is due to finish at the end of September.2


The research found that fears of funding retirement were another driver of working beyond state pension age. Close to a third (31%) of homeowners over 40 who are currently working believe they cannot afford to retire when they want to, while a further 30% are unsure whether they can.


When asked how they plan to access their pension savings, over a quarter (27%) of homeowners over 40 plan to access their pension savings as soon as they become available (private pension savings at 55 currently, moving to age 57, and state pension savings at state pension age), while a further 25% plan to access their private and state pension savings only once they hit state pension age. Only 10% plan to delay accessing all their pension savings while they continue to work into their retirement.


Andrew Tully, technical director at Canada Life, commented: “We have seen a seismic shift away from traditional retirements, driven by economic and social trends and it simply isn’t the cliff edge event anymore. The desire to continue working beyond state pension age is coupled with the fact that many people are nervous about their employment prospects in later life. However, for many, this is coupled with a desire to access their pension early. While this may help achieve some financial security in the short-term it means there are substantial doubts about the sustainability of the pension being able to support them through later life 


“The Money Purchase Annual Allowance will unwittingly catch out ‘pension dippers’ who want to continue working, given the prevalence of workplace pension schemes. The MPAA is an arbitrary allowance which is easy to increase or remove altogether, and would allow savers to rebuild their pensions, especially in light of the pandemic and resulting uncertainty created.”

With a significant number of people planning to access their pension savings while working there is a need to ensure that they understand the restrictions, such as the Money Purchase Annual Allowance (MPAA), on the amount they can continue to contribute to their defined contribution pension pot. This is highlighted by Canada Life research carried out earlier this year that found more than two-fifths (43%) of over 55s who are working are completely unaware of MPAA restrictions, while a further 40% don’t know much about the details.³


MPAA Triggers

The MPAA will apply once an individual first flexibly accesses a defined contribution arrangement (known as a trigger event). This restricts the level of contributions that can be made to a defined contribution scheme to £4,000 each tax year.

These are the most common ways to trigger the MPAA:

  • Taking an income payment from a flexi-access drawdown fund
  • Taking an income from capped drawdown (in excess of the cap)
  • Those who were in a flexible drawdown plan before 6 April 2015
  • Taking an Uncrystallised Funds Pension Lump Sum (UFPLS)


Individuals may be able to take benefits without triggering the MPAA, for example, access only tax-free cash from drawdown, or take out a guaranteed lifetime annuity.


    1. Source: Research among 1,020 UK homeowners aged 40+ conducted by Opinium Research between 26-31 March 2021. 
    2. Source:
    3.  Total employments on furlough over 45 years old 987,500 as at end May 2021.
    4. Source: Custom research for Canada Life among 1,013 UK adults aged 55+ who are working and have pension savings, conducted by Opinium, fieldwork 23 - 29 March 2021.