Mind the Gap! The effect of an increased UK State Pension Age on expected working life of employees
We examine how individuals’ retirement expectations adjust in the wake of significant reforms introduced in the 2011 and 2014 Pension Act to the State Pension Age (SPA) in the UK. Our empirical results suggest a widening of the gap between SPA and the expected retirement age (ERA): men and women do not significantly adjust their expectations upward in response to an increase in SPA, as would be consistent with the policy objective. While ERA varies by socioeconomic group, we do not find that particular at-risk groups such as the low educated or unskilled adjusted their ERA differently than other groups. Our findings may suggest that workers are not adjusting their retirement planning for the increased UK State Pension Age and could be insufficiently preparing for retirement.
JEL classification: J26
Keywords: Retirement, Expectations, United Kingdom Household Longitudinal Study