Shorter working lives

Social commentators hark back to a supposed golden age when everyone had a job for life. That is wishful thinking. There was never such a time. Companies have always gone bust. People have always lost their jobs.

Others were forced out of work through accident, illness or social pressure. It is less than forty years ago that many employers – including the Civil Service – forced women to resign from their jobs when they married.

The point the commentators are trying to make it that work life used to be more predictable. You generally stayed in one job, or with one employer, longer. There was not the expectation of regularly moving job or career. Contrast this with the workplace of the twenty-first century, where sudden changes of employer or career are now the norm whether workers like it or not.

Changing jobs can have advantages for retirement planning. If by moving job you advance more rapidly up the career ladder and boost your earnings, you are in a position to save more for retirement. But frequent changing does make planning more complicated. The more different jobs you do, the more bits of pension and savings you may collect along the way. Keeping track of them and working how you are doing in business becomes a chore.

There may be downsides too. If you swap jobs too frequently you may find you lose a year or two of pension entitlement when you move. And each time you change, you may be faced with questions about what to do with pension funds. Charges for switching money around can eat into what you have saved.

Swapping jobs more frequently is only half the story. Another fundamental change in the past few years is the rise of self-employment. Around one in five of the workforce is expected to be self-employed poses its own challenges to retirement planning. It shuts the doors on some kinds of savings and pensions, and opens the doors to others.