Over 50s could have to work for an extra 11 years to save for retirement, according to research

A paper (97-page / 669KB PDF), by the Pensions Policy Institute (PPI) shows that while the majority of over 50s working in 2011 might have enough state and private pension income to meet a "minimum acceptable standard of living" in retirement, 45% would have to work and save for an additional 11 years to continue their working life living standards.

"In the last three decades, life expectancy has increased dramatically in the UK," Niki Cleal, PPI director, said. "On the whole this is good news for individuals, but it also means that many people will need to save more and work longer if they want to have an adequate retirement income."

The report assessed the expected retirement income of workers in their 50s in 2011, assuming the current state pension ages of 65 for men and 60 for women, against a 'minimum income standard' of just under £11,000 per year before housing costs. It also considered a 'target replacement rate' level of retirement income designed to replicate living standards in working life in retirement, generally set at between 50%-80% of working income. The retirement age for men and women will be equalised from 2018, with future increases automatically linked to longevity.

Although the analysis showed that 85% of over-50s currently in work had enough pension to reach the minimum acceptable standard, 5% would have to work and save for another six years after the state pension age while 45% would need to continue working for 11 years - taking male workers to age 77.

The report acknowledges that many older workers are already forced to leave employment before reaching the state pension age due to "circumstances beyond their control", such as health problems or the need to provide care for a family member. "In order for older workers to be able to engage in employment there needs to be an appetite from employers to recruit and retain older workers and employers need to be able to provide appropriate support to those older people who need it," the report said.

Pensions law expert Simon Tyler of Pinsent Masons, the law firm behind Out-Law.com, said that employees in their 50s today represented a "lost generation" which had entered the workforce expecting the state and more generous occupational defined benefit pensions schemes to be able to support them in retirement.

According to a recent report by industry body the National Association of Pension Funds (NAPF) one quarter of defined benefit schemes, which are schemes which promise a set level of pension once an employee reaches retirement age, are now closed to future contributions as employers struggle to cope with increasing life expectancy and poor investment returns.

"Auto-enrolment comes too late for those who previously banked on state provision and therefore have little pensions savings to show for their labour. Time is now too short to get them on track for a comfortable retirement," Tyler said. "In addition, those who started their careers with the security of a generous defined benefit scheme have had their high hopes dashed by the year-on-year closure of those schemes, while the 'Thrifty Fifties' who saved in their own personal pension schemes have been seemingly punished for that foresight with investment underperformance and dire annuity rates."

Tyler said that new laws which will ensure workers are automatically enrolled into workplace pension schemes, which will begin to come into force from October, were a "step in the right direction" for younger generations yet to recognise the importance of saving for pensions early. However, for many workers "there will be no choice but to work longer", he said.