One in four older workers in the UK are now planning to retire later than they had planned two years ago, according to a survey by consultants Watson Wyatt.
The firm, which advises many of the UK's largest companies on pensions and employee benefits issues, examined the responses of 4,500 UK workers aged 50 to 64 to the recent declines in equity markets. It found that not only are one in four now planning to delay their retirement plans of two years ago but that there was a strong positive relationship between those delaying retirement and those most affected by the stockmarket decline.
Almost half said their savings have 'declined a lot' over the past three years, and one in five that they have 'declined a little'. One in ten said their savings had remains largely the same, while only one in five said their savings had increased.
Low interest rates and a 40 per cent fall in the level of the FTSE 100 has slashed the value of many people's pension funds. Employees of many companies have also been affected by companies closing their final salary pension schemes and replacing them with less generous defined contribution schemes.
The survey found that those who reported declines in the value of their savings were more likely to reduce equity exposure. Women were found to be significantly more likely to reduce their equity investment than men.
But earlier this year, the Association of British Insurers warned that Britons need to save £27 billion a year more than they are if they can expect to have a comfortable retirement.
"The bear market from the end of 1999 is the first time in which significant volumes of retirement savings were at risk in equity markets," said Jonathan Gardner, an economic researcher at Watson Wyatt. "The euphoria of the late 1990s was such that this decline or at least its scale was probably not anticipated by most investors."
The survey found that for those individuals who have already retired, there appeared to be little correlation between the degree of savings loss and the likelihood of returning to work, providing support for theories in which the decision to retire is rarely reversed.