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State Pension eligibility age and retirement behaviour: evidence from the United Kingdom Household Longitudinal Study

Ricky Kanabar and Adriaan Kalwij


Abstract: We examine individuals’ retirement behaviour in response to changes in the State Pension eligibility age introduced in various Pension Acts in the UK. Our findings show that the annual probability of retirement reduced significantly in response to a one-year increase in State Pension eligibility age, by 16 pp and 13 pp for men and women respectively. They also show that women adjusted their expected retirement age downwards in response to an increase in their SP eligibility age. These findings suggest that whilst an increase in the State Pension eligibility age induces individuals to postpone actual retirement, it does not lead to individuals  revising their expected retirement age upwards, which could result in suboptimal retirement planning. The latter can be problematic for those who rely disproportionately on State Pension as their main source of income and, arguably, targeted communication campaigns are needed to improve retirement planning

Keywords: Retirement, Expectations, United Kingdom Household Longitudinal Study

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