Friends Life : Retirement income could receive a boost of up to a third from continuing to work for five additional years

Important note: The information in this section is intended for use by journalists only and customers should not use it to make financial decisions. Please remember that information in past press releases may no longer be current

Friends Life commissions The Pensions Policy Institute to define the impact of changing work patterns on retirement income

Working five years beyond state pension age could boost income from retirement savings by a third according to 'Finance Portfolios of the Future', a study published today by pensions and insurance provider Friends Life following research commissioned from The Pensions Policy Institute.

By deferring a state pension for five years and continuing to work full time, thereby continuing to contribute to private pension savings, people could see weekly income from retirement funds rise by 33%. For those in the lowest quartile of private pension savings, this increase will take weekly pension income from £156.90 per week to £208.80 once they have given up work. This would lift them above the average £200.881weekly living costs during retirement, making up a shortfall that would otherwise make their retirement a much greater financial struggle.

'Finance Portfolios of the Future', conducted by the Pension Policy Institute (PPI) for Friends Life, defines the impact on pension income of working either full or part time beyond State Pension age (SPA) for one, three and five years. This is defined as both the amount of money a person earns after retiring private pension and other investment savings, as well as the impact of deferring their state pension as they remain in the workplace2.

Andy Curran, UK Chief Executive, Friends Life said:"It's really positive to see that people can make such a difference to their pension saving by working a relatively short amount of time beyond the State Pension Age. The retirement world is changing and people are taking the decision to work for longer. This is why it is so critical to understand the full impact this will have on retirement income and our new study uncovers how continuing to work for just a few more years can help consumers take back more control. To really make the most of retirement income, both government and the pension industry have a responsibility to help people review their options and the implications of continuing in work.

"We hope that through this study, people will find they have more freedom as to when they take the State Pension if they have a well-planned retirement portfolio. However, what is important is visualising the retirement they want and making informed decisions about how they can achieve this through managing a 'financial portfolio' of income and savings."

Chris Curry, Director, Pensions Policy Institute said:"This report unpicks the impact of changing work life on retirement income. By using data from the English Longitudinal Study of Ageing we have been able to take actual individuals and model how their pension incomes might change right the way through retirement if they behave in different ways. This has revealed that working up to and beyond state pension age, for those who can and want to do this, offers a real alternative to saving more or having a lower than ideal income in retirement."

The difference bought about by continuing in work for an extra five years is seen across the range of pension incomes. Those with the biggest pensions would see their weekly increase by a quarter, or £273.44, to £1,358 per week.

Part time work

The report also examined the effects of working part time both before and after reaching State Pension age. Choosing to work part time after State Pension age will increase income, but the change is negligible for those with median retirement income, at only £1.80 per week if they worked part time for one year after retirement.

However, this also means that switching from full time to part time work in the year before retirement will not result in a significant reduction in retirement income. The average person would see their weekly income drop by just £0.60 if they make this change.

1http://www.ons.gov.uk/ons/rel/family-spending/family-spending/2013-edition/index.html

2Deferring the full new state pension -of £155 in 2014/15 - enables an uplift of 5.8% for each year of deferral.

-ENDS-

For more information, please contact:

Case Study: Sue Lysaght, 63 years old, part-time estate agent

"I never considered a particular age at which to retire. The situation nowadays is completely different to how it was say, 20 years ago, people live longer and the pension amounts are just not viable any longer. Also people in their 60s tend to be younger in outlook with many of us preferring to keep active in a working capacity, which also helps mental agility."

* The research examined the effect of working longer on people with varied pension pot sizes in comparison to the rest of the population. These have been split into quartiles: those with the smallest pension income (25%), the median (50%), the third quartile (75%) and those with the highest income (100%). These figures assume that 25% of each pension pot is taken as a lump sum and the rest is used to provide the pension income shown.

Notes to Editors

Friends Life provides pensions, investments and insurance for over five million customers. Our key business lines are corporate benefits, protection and retirement income.

Friends Life is the brand name of Friends Life Group Limited.

Our heritage dates back to 1810, with Friends Provident being founded in 1832 to help alleviate the hardship of Quaker families facing misfortune.

Other brands in the Friends Life group include:

• Friends Provident International, which provides life assurance, pensions and investment products to Asia, Middle East, Europe, UK and other selected markets.
• fpb AG, a wholly owned distribution partner in Germany.
• Sesame Bankhall Group, which was formed in 2009, combining an IFA network, support service provider and mortgage club, to create a large distributor of professional support services to financial advisers.

Important

This news service is for information purposes only and does not provide any form of advice, recommendation or financial promotion. Any opinions expressed by third parties are those of the third party concerned and not of Friends Life Group Limited. Friends Life Group Limited does not accept liability for any errors or omissions or for loss incurred because of reliance on information or opinions given.

The content of the news items set out above are accurate only as of the date of issue and Friends Life Group Limited does not undertake any obligation to update them.

Useful links:

www.friendslifegroup.com/media-centre.aspx
www.flickr.com/photos/friendsimages
www.twitter.com/FriendsLifeTalk.

To follow Friends Life twitter page on your mobile, simply text "follow FriendsLifeTalk" to 86444 (UK only)

Friends Life is a business name of certain companies in the Friends Life group including the following

Friends Life and Pensions Limited Company number 475201
Friends Life Limited Company number 4096141
Friends Life FPLMA Limited Company number 00004599

Each of the above companies is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority

Friends Life Marketing Limited Company number 5059179
Friends Life Investment Solutions Limited Company number 6389025
Friends Life Services Limited Company number 3424940

Each of the above companies is authorised and regulated by the Financial Conduct Authority.

Friends Life Management Services Limited Company number 983330 is an appointed representative of Friends Life Services Limited, Friends Life and Pensions Limited and Friends Life Limited.

Friends Life The Blue Line Limited Company number 3146254 is an appointed representative of Friends Life Marketing Limited

Suntrust Limited Company number 1460956 is not authorised or regulated by either the Prudential Regulation Authority or the Financial Conduct Authority.

Each company is an incorporated company limited by shares and registered in England and Wales with a registered office at Pixham End, Dorking, Surrey RH4 1QA

Telephone calls may be recorded. Friends Life is a registered trade mark of the Friends Life groupwww.friendslifegroup.com

distributed by