Older people working longer and deferring retirement due to recent changes in state retirement ages

New research has found that people in lower-paying jobs are more likely to respond to rising statutory retirement ages by working longer hours than those who are better off.

Data from the Institute for Fiscal Studies (IFS) shows that 65-year-olds are working a total of 1.8 million extra hours per week due to the recent increase in the statutory retirement age from 65 to 66, which was phased in between 2018 and October 2020.

By mid-2021, the employment rate for men aged 65 rose to 42 percent and for women to 31 percent – both the highest since at least the mid-1970s.

And in the case of women, the figures are likely to be the highest rate ever in the UK, according to the study funded by the Center for Aging Better.

However, it has also been found that the impact of the increase is uneven.

In the most deprived fifth of areas, the employment rate increased by 13 percentage points for women aged 65 and by 10 percentage points for men.

In the wealthiest areas, employment rates for women and men aged 65 increased more slowly, by four and five percentage points, respectively.

This almost certainly reflects greater income needs in old age among people living in poorer areas, the IFS says.

Jonathan Cribb, Associate Director at IFS and author of the report, said: “The strong employment gains have particularly come from those in poorer areas and from those with lower levels of education, suggesting that without a state pension they cannot afford to to retire.”

In general, more than nine in ten 65-year-olds are not changing whether they will be in paid work by age 65 simply because of the higher state retirement age, she added.

This is often because the majority of men and women left the labor market before the age of 65, and some others would have remained in paid work even if the statutory retirement age had remained at 65.

By mid-2021, the employment rate for men aged 65 rose to 42% and that of women to 31%

The IFS said the research will be crucial evidence for Baroness Neville-Rolfe as she conducts the second independent review of the state retirement age for the Department for Works and Pensions (DWP).

It is also estimated that another 5,000 65-year-olds are unemployed and looking for work as a direct result of raising the state retirement age from 65 to 66.

In addition, around 25,000 people are permanently unemployed and not retired due to the increase in the statutory retirement age from 65 to 66 for health reasons.

Laurence O’Brien, Research Economist at IFS and another author of the report, said: “For most 65-year-olds, around 640,000 of them, a higher state retirement age simply translates into lower earnings rather than changing their work patterns. “

The researchers also suggested that many people approaching state retirement age may have an “unfulfilled desire” to work part-time or more flexibly than they currently do.

Emily Andrews, Associate Director of Evidence at the Center for Aging Better, said: “With the SPA [State Pension age] continue to rise that [UK] The government needs to seriously look at meaningful support to help unemployed people in their 60s get back into paid work.

“Otherwise, these policies will further harm those who are already disadvantaged by an age-constrained labor market.

“And now it’s clearly time to seriously consider what further financial support should be offered to those for whom work is simply not an option.”

Phil Brown, Director of Policy at B&CE, the provider of the national pension, said: “The report’s findings provide further evidence that reforms to the automatic registration system are needed.

“Lowering the earnings limit from £10,000 for automatic enrollment to £6,240, allowing 18-21 year olds to join an occupational pension and counting contributions from the first pound earned will benefit all low earners and more Enabling people to save money will top up their state pension when they retire.”

There are a number of ways you can keep up to date with the latest stories from The Daily Record.

You can join the conversation on our Money Saving Scotland Facebook group for tips on saving, news on benefits, consumer help and advice and the latest shopping offers.

Sign up for our Record Money newsletter to get the top stories straight to your inbox every Tuesday and Friday – you can sign up here.

You can also follow our Twitter account @record money_ for regular updates throughout the day.

A DWP spokesman said: “Older workers are a tremendous asset to businesses and our multi-billion dollar Plan for Jobs and 50 Plus: Choices are providing support to older workers across the country to reskill, acquire new skills and get into work.

“Raising the state retirement age in line with life expectancy has been the policy of successive governments for many years.”

Get the latest savings and benefits news straight to your inbox. Sign up for our weekly Money newsletter here.

Comments are closed.