The Government is coming under fierce pressure to introduce rules which allow more flexible retirement packages.
The Employers' Forum on Age, chaired by FSA chairman Howard Davies, is calling on the Inland Revenue to revamp tax rules on pension payments.
In a report this week, the forum says tax rules on pensions are preventing employees enjoying a flexible retirement. Employees can draw a pension at 50 but have to retire fully and take a full pension. The forum says increasingly employees do not fully retire but take up part-time employment as they get closer to retirement age.
Davies says: "It is not possible to draw a partial pension alongside a part-time wage from the same employer."
The Revenue says it is set to release a discussion paper on flexible retirement in the new year.