Among those aged 50-64, the fall was even more stark, with a drop of 84,000 of so-called economically inactive people, suggesting many of those who decided to retire in the pandemic are now returning to work. The ONS added that there was a fall over the quarter of 49,000 in people citing retirement as a reason for inactivity.
Decisions to return to work may be necessary for older workers as costs continue to rise, but many may be unaware of what that means for future retirement savings.
Royal London pensions expert, Clare Moffat, explains: “Faced with rising prices squeezing the household budget, many 50 and 60 somethings who had previously left the job market, are finding the need to return to the world of work for additional income. However, those that have started to take flexible income payments from their defined contribution pensions may be surprised to learn that their ability to continue saving for retirement is restricted by a little known rule called the money purchase annual allowance (MPAA).
“The MPAA rule means that once someone has accessed any of their pensions flexibly, they and their employer can only contribute £4,000 in total to all defined contribution pensions every year. It’s something that many workers over 55 years of age who are transitioning into retirement, dipping into their pension while working reduced hours or those who thought they’d retired, but are now working again, should be aware of.”
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