A third (31%) of UK homeowners over 40 who are not yet retired plan to work beyond their normal State Pension age, according to a new report.

Fears behind funding retirement were a key driver of working beyond the State Pension age for those surveyed by Canada Life for the report.

A third (31%) of homeowners over 40 said they do not believe they can afford to retire when they want to, while a further 30% were unsure whether they can afford to stop work at all.

A quarter (27%) of those surveyed said they planned to access their pension savings as soon as they become available, while a further 25% said they planned to access their private pension savings only once they hit State Pension age.

One in 10 said they would delay accessing all their pension savings while they continued to work into their retirement.

Almost one in four (39%) of homeowners between 40 and 50 told Canada Life they were worried about their job prospects leading up to retirement.

According to UK Government statistics, 987,500 over 45-year-old workers are currently on furlough. The furlough scheme is due to end at the end of September.

Andrew Tully, technical director at Canada Life, warned that the Money Purchase Annual Allowance could catch those who want to keep working into their retirement.

He said: “The Money Purchase Annual Allowance will unwittingly catch out ‘pension dippers’ who want to continue working, given the prevalence of workplace pension schemes. The MPAA is an arbitrary allowance which is easy to increase or remove altogether, and would allow savers to rebuild their pensions, especially in light of the pandemic and resulting uncertainty created.”

With a significant number of people planning to access their pension savings while working there is a need to ensure that they understand the restrictions, such as the Money Purchase Annual Allowance (MPAA), on the amount they can continue to contribute to their defined contribution pension pot.”

Research carried out earlier this year by the provider found that more than two-fifths (43%) of over 55s who are working were completely unaware of MPAA restrictions, while a further 40% knew little about the details.

Research was conducted among 1,020 UK homeowners aged over 40 by Opinium Research between in March.