The trend for early retirement looks set to end and people will have to work for longer to fund a comfortable retirement, researchers have warned.

Increased life expectancy combined with less generous company and state pensions looks set to end people's dream of finishing working in their 50s, according to Professor Richard Blundell of the Institute for Fiscal Studies.

Last year, the number of men aged over 60 who were still working fell to 30 per cent from a high of 70 per cent in the mid Sixties but the researchers warned this trend was unlikely to continue.

Professor Blundell said people would need to continue working for longer to save funds for a comfortable retirement.

He said: "As a nation gets wealthier, it will want to spend more time in leisure activities and retirement is a reflection of this.

"With earlier retirement and longer expected lives, this means a need to save more for retirement.

"Recent changes to public and private pension schemes are swiftly reducing incentives for the vast majority of men and women to retire early."

Average life expectancy has increased by more than ten years since the Fifties, and men retiring at 65 can now expect to live for another 15 years, while women are likely to live for another 20.

This, combined with lower interest rates and lower returns on investments, has led to pension schemes becoming more expensive to run.

As a result, many companies have stopped new staff joining their closed final salary schemes, which guarantee members a proportion of their final pay when they retire.

Instead, new joiners are being offered more risky defined contribution pensions.

Under a defined contribution scheme, the employer guarantees to pay a set amount into an employee's pension fund but offers no guarantee about what the fund will be worth when the employee retires.

This leaves individuals to shoulder the risk of stock market fluctuations.

The fund also has to be used to buy an annuity when the individual retires, although annuity rates have fallen sharply in recent years because of increased life expectancy and low interest rates.

Professor Blundell said state benefits were also less generous, except in the case of low-income pensioners.

The age at which a woman could claim a state pension had also been increased.

Many large companies had already closed their final salary scheme to new members of staff as they became increasingly expensive to run.

Accountancy group Ernst & Young said it was closing its final salary scheme to new contributions from March.

Members of the scheme, which was closed to new employees in April 1997, will no longer be able to pay money into it and will instead have to join the group's defined contribution scheme.

The TUC warned companies against "junking" final salary pension schemes because it could damage staff motivation and employee loyalty.

The union organisation said it was placing staff representatives on company pension schemes on "alert" following speculation about the future of some schemes.

Tom Powdrill, a senior policy officer at the TUC, said: "Many firms are taking a short-term approach to pension provision, junking final salary schemes because at present they carry a significant cost. This risks damaging staff motivation and loyalty."

Mr Powdrill said it was misleading to say final salary schemes were too expensive, adding that good pension arrangements ensured retired workers had a decent income.

He said: "We will be putting our network of member nominated trustees on alert so we can defend good final salary schemes that come under threat."