Almost half of all workers are planning to stay in employment beyond their retirement age because they can not afford retire, new research has found.
According to the National Association of Pension Funds (NAPF), 48 per cent of all workers are planning to work in paid or volunteer work beyond the state pension age.
Eight in ten of the people choosing to stay in paid work will do so because they will not have enough money to stop working, the group found.
The findings prove that Britain is facing a "pension time-bomb" as people have not saved enough for their retirement, experts said.
The NAPF found that over half of all workers are not members of a workplace pension scheme. Even among 55-64 year-olds, just 40 per cent of people have a workplace pension.
The findings are contained in the NAPF’s Workplace Pensions Survey, a biannual snapshot of the pension landscape.
Joanne Segars, the chief executive of the NAPF, said that while many people will choose to stay in work, "many more" will do so out of necessity because they "simply cannot afford to retire".
Ms Segars said: "People will end up going to their friends’ retirement parties and wondering when it will be their turn. We are all living longer, so it is logical that we will work longer too. But people still deserve a good retirement, and at the moment the UK is not saving enough towards that."
The state pension age is currently 60 for a woman if she was born before April 6 1950, but it is rising. The pension age is 65 for a man. By 2020 the state pension age for men and women will rise to 66.
The NAPF, which represents 1,200 pension funds with assets of £800 billion, found that nine in ten people believe that the state pension – currently £107.45 a week - will not be enough for them in retirement.
When asked what kind of work they will do after their retirement age, six in ten people said that they will reduce their working hours while a quarter said they would take a less challenging role in their profession.
Ms Segars said that the Government’s recently-launched auto-enrolment programme, which will see up to 11 million people be given a workplace pension for the first time, will be a "huge help" in getting more workers saving.
Under auto-enrolment, all workers who are over 22 and earn over £8,105 a year will automatically be placed in a workplace pension. However under Department for Work and Pensions (DWP) rules they can opt out if they want.
The NAPF’s report found that 35 per cent of workers are likely to opt out. Three in four of these said they can not afford to pay into a pension scheme.
This figure is backed up by separate research carried out for the Telegraph by Friends Life. According to the company 45 per cent of people who have heard of auto-enrolment are planning to opt out.
Friends Life also found that 58.5 per cent of people had not heard of auto-enrolment.
Colin Williams, managing director of corporate benefits at Friends Life, said that the UK is facing a "pensions time-bomb".
Ms Segars said that auto-enrolment "will transform pensions saving in the UK"
She added that although many people surveyed by the NAPF said that they planned to stay in their current job beyond retirement, this will not always be possible.
Ms Segars said: "Many people think they will simply keep their current job and go part-time, but that might not always be possible. And only one in four said they would consider switching to a more junior role."
"It is important that people remain flexible and open to different options. Likewise, the workplace will have to adapt to the needs of a growing army of older workers, many of whom have vital skills and experience," she said.
The NAPF surveyed over 2,000 people.
Source: The Telegraph